In Kentucky, people can get involved in their own business in many ways. It is not always a matter of creating a product, marketing it and selling it by themselves. In some instances, they take an established brand and work under its umbrella by purchasing a franchise. While many franchises have solid track records for franchisees and the success stories are prevalent, there is always a risk with making this type of commitment financially and personally. Understanding the basics of franchise ownership is essential to know if it is the right thing to do.
Fundamental facts about buying a franchise
A franchise is often associated with a large burger, pizza or sandwich chain, but it could be for other businesses like hardware, clothing and more. The benefit is that there is already an established name and business plan in place. Theoretically, the new franchisee might be under the impression that all he or she needs to do is follow the blueprint and they will have success. Still, as with any business venture whether it is a startup or a franchise, there is inherent risk.
Since the franchise is selling its name and reputation, it will have a strict contract as to how the franchisee must operate the business. Often, that includes the requirement to make certain purchases, reach benchmarks and cede a significant portion of overall control to the corporation. This is before considering the upfront costs. This can be a major outlay that will require financing from outside sources.
Even those who are putting a portion of their own money in as a down payment must be cautious as they can place their personal situation at risk. If they own a home, that could be jeopardized if the wrong strategies are used to make the buy-in. The contract could have stipulations leaving the franchisee responsible for wrongdoing at the workplace.
Franchises can be worthwhile, but legal protection is critical
When thinking about buying a franchise, it is vital to be completely aware of all the contractual language and business law requirements the franchisee must abide by. Many times, people gloss over the arcane details and miss key points that can make the difference between success and failure. In this type of venture, failure can be disastrous. To be fully protected and know if a franchise or another type of business is the preferred option, having experienced advice is crucial from the beginning.