International Law

Is a Franchise a Sure Thing? No

Barry Thomsen has an interesting and informative article about franchising, in which he writes:

"The only sure thing I've learned from owning a franchise is that the franchisor receives their initial fee and a check every month that you are open for business.

This is in no way a negative comment unless you take the entire process for granted.

It is not the lazy man's way to riches nor is it a Ponzi scheme to be wary of.

It's simply another way of owning your own business with the guidance from a sort of partner who also wants you to succeed.

Because without you and others like you, they can't grow and expand.

Granted, they are making money from all your efforts and sweat equity, but they should be providing something valuable in return."

The whole article is very sound, practical and a realistic view about franchising.

Here is another good piece of advice:

"Most franchise companies will require a certain amount of start-up capital plus the non-refundable franchise fee.

There are cases where they have outside sources of funding or even their own funding in larger companies. But don't expect to go into it with only a couple thousand dollars and borrow the rest.

You would have a difficult time in a new business making enough money to pay rent, supplies, royalty payments and a loan. So don't go into a franchise being cash-tight right from the beginning."

Barry has a blog called www.idealetter.com, so if any of you check it out, let me know what you think.

Full post as published by Misleading Advertising Law on September 18, 2008 (boomark / email).