| How can I prepare prior to shopping at a Franchise exposition?
Attending a franchise exposition allows you to view and compare
a variety of franchise possibilities. Keep in mind that exhibitors
at the exposition primarily want to sell their franchise systems.
Be cautious of salespersons that are interested in selling a
franchise that you are not interested in.
Before
you attend, research what type of franchise best suits your investment
limitations, experience, and goals. When you attend, comparison shop
for the opportunity that best suits your needs and ask questions.
Know how much you can invest
An
exhibitor may tell you how much you can afford to invest or that you
can't afford to pass up this opportunity. Before beginning to explore
investment options, consider the amount you feel comfortable investing
and the maximum amount you can afford.
Know What Type of Business is Right for You
An
exhibitor may attempt to convince you that an opportunity is perfect
for you. Only you can make that determination. Consider the industry
that interests you before selecting a specific franchise system. Ask
yourself the following questions:
Have you considered working in that industry before?
Can you see yourself engaged in that line of work for the next twenty years?
Do you have the necessary background or skills?
If
the industry does not appeal to you or you are not suited to work in
that industry, do not allow an exhibitor to convince you otherwise.
Spend your time focusing on those industries that offer a more
realistic opportunity.
Comparison Shop
Visit
several franchise exhibitors engaged in the type of industry that
appeals to you. Listen to the exhibitors' presentations and discussions
with other interested consumers. Get answers to the following questions:
How long has the franchisor been in business?
How many franchised outlets currently exist? Where are they located?
How much is the initial franchise fee and any additional start-up costs? Are there any continuing royalty payments? How much?
What management, technical, and ongoing assistance does the franchisor offer?
What controls does the franchisor impose?
Exhibitors
may offer you prizes, free samples, or free dinners if you attend a
promotional meeting later that day or over the next week to discuss the
franchise in greater detail. Do not feel compelled to attend. Rather,
consider these meetings as one way to acquire more information and to
ask additional questions. Be prepared to walk away from any promotion
if the franchise does not suit your needs.
Get Substantiation for Any Earnings Representations
Some
franchisors may tell you how much you can earn if you invest in their
franchise system or how current franchisees in their system are
performing. Be careful. The FTC requires that franchisors that make
such claims provide you with written substantiation. Make sure you ask
for and obtain written substantiation for any income projections, or
income or profit claims. If the franchisor does not have the required
substantiation, or refuses to provide it to you, consider its claims to
be suspect.
Take Notes
It may be difficult to
remember each franchise exhibit. Bring a pad and pen to take notes. Get
promotional literature that you can review. Take the exhibitors'
business cards so you can contact them later with any additional
questions.
Avoid High Pressure Sales Tactics
You
may be told that the franchisor's offering is limited, that there is
only one territory left, or that this is a one-time reduced franchise
sales price. Do not feel pressured to make any commitment. Legitimate
franchisors expect you to comparison shop and to investigate their
offering. A good deal today should be available tomorrow.
Study the Franchisor's Offering
Do not sign any contract or make any payment until you have
the opportunity to investigate the franchisor's offering thoroughly.
As will be explained further in the next section, the FTC's
Franchise Rule requires the franchisor to provide you with a
disclosure document containing important information about the
franchise system. Study the disclosure document. Take time to
speak with current and former franchisees about their experiences.
Because investing in a franchise can entail a significant investment,
you should have an attorney review the disclosure document and
franchise contract and have an accountant review the company's
financial disclosures.
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