Is Buying a Franchise Right for You?

Choosing whether you want to open your own business or operate a franchise can be a difficult decision. Both decisions carry certain risks and the potential for certain rewards. The following is a basic guide to help determine whether buying a franchise is right for you.

Franchise or Your Own Business?

It is important to consider whether buying a franchise is the best method to start a business. A franchise gives you the right to use the franchisor’s name and methods for a certain, defined period of time, such as 10 or 20 years. However, your rights will end when that period of time is up, leaving you without a business to sell or pass on to your heirs. In addition, most franchise agreements contain a non-compete provision that will prohibit you from operating a similar type of business under a different name for a certain number of years.

Buying an existing business or opening your own business will avoid some of the previously mentioned issues. However, buying or opening your own business means that you do not get to use a well-known brand name, and you do not get the training or support of a franchisor. On the other hand, you will not have to pay a franchise fee or royalties, and you will own the business outright.

Speaking with an attorney who is experienced in franchise law matters can help provide you with the clarity you need to make the decision that is best for you.

Analyzing the Disclosure Document and Proposed Agreement

Franchise agreements are often drafted in a one-sided manner favoring the franchisor. Many franchise agreements contain unreasonable or unusual provisions. The franchise disclosure document may contain information that raises red flags about the system. It is critical that you have an experienced lawyer review the disclosure document and proposed agreement, to identify any red flags, or provisions that are unusual or unreasonable, which you might want to ask the franchisor to change.

Contact a Lawyer to Learn More

David T. Azrin, Attorney at Law, has decades of experience practicing franchise law. He can help you explore your options and determine whether a franchise might be the right choice for your situation. From his office in New York, he represents clients across the U.S. and around the world. Call or complete the online contact form to schedule a consultation.