This article are provided for information purposes only, and are not intended as legal advice.

Buying a franchise

December 30th, 2008

Franchise is just a type of business.  In a weak economy as we now have, there are good businesses and poor businesses.  The same goes for franchises, some do very well and others poorly in a slower market. Franchises catering to lower end products and restaurants such as McDonald’s do well in a slower economy but high end restaurants may not be doing well. 

Another important aspect of franchises is location, location, location.  You can have the most successful franchise but if it is a poor location, the sales will be lacking and the franchise may not be successful.  Look for a franchise which you believe is recession proof and look for one which has a good location.  Do not forget to consider, there are new franchiseswhich are sold by the franchiser and franchises which are existing locations for sale.  The later has a track record and you can see if it has been successful whereas a new franchise, you never know until you open the door to find out how many customers you will get. 

Some locations may have an excellent traffic flow to a strip mall however the type of customers going to the mall may not go into the franchise store.  Remember, traffic to a plaza is great but you are located between non synergistic businesses, you are not likely to get a lot of customers.  The franchise I referred to above was located beside a large bowling alley and a large all you can eat buffet.  Customers from neither of these businesses went to the franchise and it failed.  

Filed under: Franchises — Gary Landa @ 10:49 am

1 Comment »

  1. You MUST do your homework! We bought a franchise and did our due diligence using professionals, a purchase lawyer, an accountant, a real estate agent, a huge well known bank.. and we still lost our shirts. After we lost our store and tried to take the vendor to court for corporate fraud, we could not continue due to stress, depression and no money. We have a damn good case but are convinced that the lawyer who we finally found to represent us pro bono, was cooperating with our bank and intentionally waited till time was almost up and dwindled our case down to nothing before he walked away. At that point we had no time to do anything else about it. He knew our position. Be SO careful. We lost our life savings and equity in this franchise.. it can and DOES happen. You have to have money to make money and you have to have money to fight for your rights if something goes wrong. The legal system does not care about you, as we found out. And (some) franchisor’s are crooks. We received no help from them at all, just deception. BE CAREFUL!

    Comment by Fran — November 11, 2009 @ 3:46 pm

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