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How do I Buy a Franchise?

Article Details
  • Written By: Felicia Dye
  • Edited By: Heather Bailey
  • Last Modified Date: 01 November 2016
  • Copyright Protected:
    2003-2016
    Conjecture Corporation
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If you want to buy a franchise, you should be prepared to do a lot of work before the deal is completed. The first step is to research a viable franchise option. Second, you need to make sure you have access to the necessary capital. Once you do this, you can submit your application and choose a legal representative in case you get a positive result.

To buy a franchise, you need to decide what type of business you would like to have. People base their decisions about this on a number of factors, including start-up costs and personal interests. It is important to make sure this decision is sound and not based on minor factors. To help increase the chances of success, a substantial amount of research and consideration are usually necessary to confirm that the business is viable in the location where you want to operate.

Buying most franchises will require the payment of start-up costs, which is often a substantial amount. You will need to develop strategies to obtain that money. Most likely, you will need to get the majority of it before you even attempt to purchase the franchise. Remember that start-up costs include not only the fees the franchise owner will charge, but also the start-up overhead, such as equipment, labor, and property lease or purchase.

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Once you are sure you have sufficient financial resources, you will need to apply. Owning this type of business is not just a matter of deciding that you want it and whipping out the cash to make your purchase. The franchise owner must agree to sell to you, and normally this will only happen during a formal application process.

Be aware that there are generally requirements that must be met to buy a franchise. You should be familiar with these before you attempt to submit an application. The requirements often involve satisfactory credit and background checks. If you know that either of these records will display you in a negative light, you should work to clean them up before you apply.

Another requirement of many franchises is an approved site. Franchise owners are often particular about the location where businesses bearing their trade names will be placed. If you do not already have a site or a potential site, you may need to get one.

If your application is approved, the time to pay the franchise owner and sign contractual documents will come. You should not do either before you have an attorney look over the paperwork and offer you professional advice. To buy a franchise is a major commitment and such transactions should not be completed without legal guidance.

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