FRANCHISE BASICS FRANCHISE BASICS
30
THINGS TO CHECK R BEFORE YOU INVEST
Get set prior to your purchase with our easy checklist. Just tick off the must-do items.
Are you confident in the franchisor?
Have you worked out your operating costs?
What are the franchisee and franchisor obligations?
Have you seen a disclosure document?
Do you know the term of the agreement?
What training is available and who pays for it?
Is the franchisor compliant with the Franchising Code of Conduct?
Do you need a permit or license to operate the business?
Who owns the intellectual property and what is licensed to the franchisee?
Have you run a credit check on the franchisor?
Is the business operating from fixed or mobile premises?
What marketing will the franchisor implement?
Does the franchisor have a history of litigation? Are there any cases coming up?
Have you checked the lease? Is there a right to renew?
What marketing is your responsibility?
If you are buying an existing business, have you seen current financial statements (balance sheets, profit and loss, tax returns)?
Does the length of the lease match the franchise term?
What is the dispute resolution process?
Have you evaluated the financial returns?
What are the store fit-out costs?
Do you know what it is like to be a franchisee?
If you are buying a greenfield (brand new) site, do you have sales and profit examples and know the method behind the calculations?
Are you working within a territory? If so is the area exclusive?
Do you have an exit plan?
Do you know all the expenses franchisees are required to pay?
Are you restricted in your product purchase?
Have you spoken to former and current franchisees about the business?
What royalties are there and how are they calculated?
Are you required to reach a minimum performance level?
What restrictions are there on the franchisee and guarantor operating a similar business?
FEB/APR 2020 | 152 | WWW.FRANCHISEBUSINESS.COM.AU
