Examine a franchise's background before making the investment
- Wednesday, April 18, 2012
Amid all of the considerations franchise buyers examine before making their investment decision, a company's background should be the first. A franchise's history can tell a lot about the financial health of the company, its future success and its operating procedures. Being aware of this information early on can help potential buyers decide if a particular franchise opportunity is right for them.
Buyers can access this information by requesting a copy of the franchisor's disclosure document. Franchisors are required by law to provide potential buyers with this paperwork at least 14 days before requesting that they sign a contract or pay any funds to the company.
The disclosure document will first provide buyers with background information about the company, including how long it has been in business, special laws that are assigned to the industry and license or permit requirements needed to operate the company. In addition, the document will give a thorough description of the management leadership that oversees the franchise, as well as each member's experience, education and training. It will also shed light on how long each member has been with the company and their contributions to the franchise.
Importantly, the disclosure will also highlight any litigation issues that the franchise has faced, which may impact its profits, reputation, brand or restrictions. In addition to information about franchise leaders' criminal histories, the disclosure will provide details on any violation of franchise law, deceptive practices or fraud. In addition, buyers will be informed of any lawsuits taken by the franchisor against franchisees, and the reasons behind them. There are several laws, rules and restrictions a franchise owner comes under when purchasing a franchise. These relate to company structure, the number of units that may be opened and where, and an owner's rights to sell the company in the future. Having access to older lawsuits and rulings can provide insight on these restrictions and how they are handled by the franchisor.
The section will also spell out any fees or costs that will be passed onto the franchise owner and which expenses the franchisor will be responsible for paying. Understanding these costs can help buyers make decisions about financing. There are a variety of costs that may be laid out in the disclosure, such as those relating to leases, equipment, supplies and rentals. But other costs may be left out and should be inquired about, such as advertising fees, continuing royalty payments, licenses, training or legal fees.
The Liberty Tax Service franchise opportunity is appealing to a diverse America, ranking highly for its affordability and potential. Entrepreneur magazine has ranked Liberty Tax Service on its “Franchise 500” list of best franchise opportunities since 1998. Liberty Tax Service is the only tax franchise on the Forbes magazine’s “Top 20 Franchises for the Buck (2012)." Our tax franchise is an affordable and viable business choice. Each office provides thorough, computerized tax preparation coupled with superior customer service. For the best small business opportunity in the income tax franchise industry, choose Liberty!