Frequently Asked Questions-

What is franchising?

Franchising is a way of business where a person known as a franchisor licenses and trademarks its business making it unique and awarding the right to a franchisee to operate more than one outlet within the defined location area in the franchise agreement.

Why should you own your business?

Owning your own business not only gives you a financial stability, in addition to increasing your income by letting be your own boss, and making you independent.

How do I choose the ‘right’ franchise for me?

When deciding what kind of franchise you want to get into, you should think about what you enjoy doing on your spare time. Once you know you should find out what are the existent opportunities in that franchise market and what the financial capabilities there are.

Why should I buy a Franchise?

Throughout the years, lots of surveys and studies have demonstrated that franchises have had a better success than starting a business from on your own. A well run franchise would offer a turnkey business: from site selection to lease negotiation, training, mentoring and ongoing support as well as legal requirements and troubleshooting. The Franchisee gets the advantage of the experience and expertise of the Franchisor who should have a proven business system in place.

How do I franchise my Business?

When franchising your business you need to do a lot of research, analysis, recruitment, and preparation to be made. You also need to take into account the strengths and weaknesses of your business, really understand the realities of franchising, what makes your business stand out and be unique that franchisees would choose to be part of your business.

It is also important to protect your business, to make it unique, by using Intellectual Property such as your Trade Mark, Trade Name, Designs and more.

What kind of research and analysis should I do?

When doing research you must define and learn about your competition; learn about the market in which your business will operate, and know what the competitive Franchisors offering at all times. It is also vital for you to analyze your strengths, weaknesses, past income and expenditure trends of your business. Determining what a franchisee can earn as well as the financial linkages between you and the franchisee is very important.

What is the cost of a franchise?

The price of a franchise depends mainly on the type of franchise it is, the franchise fees, and start up costs. The size of the land parcel required to hold the building is what determines most of the cost, however. These businesses can typically be financed. Costs also vary whether the business is home based or mobile, and if you have a financial or operating partner.

Is it possible to own more than one franchise?

When you own a franchise and you are successful, then you have the opportunity to open another franchise if the territory is available, and the franchisor is willing to sell you another franchise. However, if you own a fast food franchise, you may be restricted in purchasing from another franchisor or another brand; however you can always purchase another type of franchise.

Is it possible to re-sell a franchise?

Re-selling franchises are very common and it happens when a franchisee decides to sell an existing franchise to someone who in their turn will take it over, and if the whole process is managed accordingly, both the buyer and the seller will receive benefit.

Is there a key to have a successful franchise?

In order for a franchise to succeed, companies usually look for a strong team with expertise in the franchising industry. There is no written secret about how to be successful with a franchise, however reading about successful ones such as Mc Donald and others you might get some useful tips.

Are franchises affordable?

When buying a franchise, a franchisee needs to make sure that they have their enough finances as well as a solid business plan, in order to acquire the essential funding from the bank, and from the investors.

Do I need to sign any contracts or agreements?

There are generally two parts included in the agreement: there is the purchase agreement and the franchise agreement. The purchase agreement explains the details about the upfront transaction, as well as the terms of the purchase. The agreement made between a franchiser and a franchisee is called The Franchise Agreement which is very important. The reason of its importance is that it establishes the obligations, rights and limits of both parties once the franchise is up and running. It is advised for both parties to get legal advice when writing the agreement so that everything is clear and the business can run successfully in a smooth manner.

How do I learn how to run my franchise?

For franchisees to be successful when running their business, they need to go to a structure training course, which most franchisers have put in place to make it easier for their franchisee. It is important that the training is discussed with the franchiser before the agreement is signed.

How do I choose the location of my franchise?

One of the main key for a franchise to work is the location which not only needs to be affordable but spacious, and in a convenient, popular place. That is why researching and studying your location is a major factor.

Are there different types of franchises?

There are all types of franchises available. From food, to child care, to pet care, to anything you might be interested in is available. There is a new franchise business opening somewhere in the United States every few minutes each business day, franchising is without a doubt the triumph story of the 1990's. Every year more and more franchises opportunities appear to cover virtually every category of the small business field.

How do I make Profit?

Franchises success rate are generally better than the success rate you get from opening your own independent business, however there are not set rules as how to make your business profitable. Most of the margins you make usually are a reflection of your capability to run your franchise. A way to find out how much profit your franchise will generate is to ask the franchisor a document that illustrates the typical franchise earnings, and if the franchisor does not provide such document you can always contact other franchisors in that same field.

Is there a way I can do research about a potential franchisor?

In order to investigate the franchisor, you need to obtain the franchise document (Uniform Franchise Offering Circular), also referred as the UFOC. The UFOC is made in agreement with the requirements of the Federal Trade Commission (FTC). This document has information on the principals, their backgrounds audited financials and a lot of other pertinent data which includes the current franchise agreement. The UFOC has a list of franchisees, which you can contact, and eventually meet.

Can I afford a franchise?

There are a few things to consider when investing in a specific franchise: You carefully need to think about how money you have to invest, your abilities, as well as the goals you wish to achieve. One of the most important things you need to keep in mind is how much money you have to invest. The primary reason for business failure usually is under capitalization. The franchisor will usually give you an idea of the initial costs but you must keep in mind that these costs can change, and that you must keep money on the side to open your franchise, run it until it is profitable. A good way to get an idea is to visit local franchises and asking them how long did it take their franchise to be profitable after their opening.

Is it possible to get financial help from the franchisor?

Although there are franchisors that do assist in franchise financing, not a lot do. This depends on the franchisors. Even though considering franchisors for financial help is a good idea, you should always seek other options such as investors, family, friends, as well as local banks.

What is a Company’s pre-sale disclosure document?

The Franchise Rule demands franchise and business opportunity sellers to offer to potential customers a disclosure document. However, the FTC does not entail filings of these documents. There is an overall of 13 states that keep franchise offering circulars on file, and 26 states that require business opportunity disclosure filings. The majority of states supply copies of these disclosures, generally by allowing visitors to their offices by appointment to review or copy the documents.

Can I make a complaint about a company?

Unfortunately, there are no federal, state agencies or private organization that can tell you whether a company is legitimate or not. The FTC or the Better Business Bureau can report on whether consumers have made a complaint about a company. However, operators of fly-by-night franchise and business opportunity scams are aware, and may change the name and location of their company every few months to avoid a record of consumer complaints.

There is no other way to check the track record of a franchisor or any other business seller, by personally talking to least 10 or more preceding sellers. However the Franchise Rule demands companies to at least give 10 prior purchasers’ names, addresses and telephone numbers, who are located near your location so that you can personally meet them and ask them all kind of questions to check if they are legitimate.

If you have consumer complaints for the FTC, you can write your complaints to:

Freedom of Information Act Request

Federal Trade Commission

Washington, D.C. 20580.

Please identify your letter as a "FOIA Request" and include (1) your name, address and daytime phone number, and (2) the name and address of the company you are asking about.

The FTC does not charge the public for searching, reviewing documents, or copying. However, it is always a good initiative to state the maximum you are willing to pay, in order for them to contact you in the event that any valid fees for these services will be higher than your limit.

To request more information you can contact the Better Business Bureau online at: www.bbb.org

How can I file a complaint about a company?

When having problems with a franchisor, or seller it is always wise to obtain advice from a private attorney about bringing a lawsuit or any other legal action that may help resolve the problem. It is also a good idea to send your complaint to the FTC in order to help them identify companies and practices that affect a large segment of the public, and it is also practical for law enforcement use.

When filing a complaint please write what you thought was ambiguous or misleading about the company, its promotional materials, disclosure document, or others. To keep your letter confidential, please print the following words on top of each page: "Privileged and Confidential". Include your name, address, and day time number where you can be reached. Copies of written claims or promotional materials that you believe are bogus, as well as any extra copies of valued information you think might help should be sent. (Please do not send originals)

Address complaint to:

Consumer Response Center

Federal Trade Commission - Rm. 130

600 Pennsylvania Ave., NW

Washington, D.C. 20580.


American Bar Association Service Center

321 North Clark Street

Chicago, IL 60610

(800) 285-2221