Considering a franchise? Pause to analyze
Maybe you’ve thought about buying a franchise because you’re eager for a career change. Perhaps you want to be the boss, or to build a family business. Whatever your motivation is, know that buying a franchise takes a major financial investment and a serious personal commitment. If you wonder whether owning a franchise is right for you, ask yourself some questions.
- How much can you afford to invest? Will you invest on your own or with partners? Investing in a franchise, like all investments, involves financial risk. Your financial situation will play a big part in your decision.
- What special skills and abilities do you have? Do you want a franchise — like auto repair or tax preparation — that calls for technical experience or education?
- What are your long-range goals? Franchisees must commit money and time, and must operate by the franchisor’s playbook. Will you be comfortable making a multi-year commitment and working within a franchisor’s controls?
Under the Franchise Rule, the FTC requires franchise sellers to give prospective franchisees information they need to make informed investment decisions. If you want to check out a specific franchise, read the FTC’s Buying a Franchise: A Consumer Guide and ask a lawyer, accountant or experienced advisor who represents your interests to work with you. In several states, the securities agency or other department regulates the sale of franchises. Before you invest, contact your state franchise administrator and ask about your state rights.