How To Choose the Perfect Franchise Business
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NEW YORK (MainStreet) -- Pursuing the franchise model can make a business owner a small fortune, especially since it remains a growing part of an otherwise struggling economy, but deciding among brands and industries in the franchise universe is a make-or-break decision, says franchise attorney Lane Fisher of Fisher Zucker.
Fisher sits on the board of directors for the International Franchise Association, the industry's main trade association. This weekend, the IFA's International Franchise Expo will take place for the first time at the Jacob Javits Convention Center in New York City. In previous years, the Expo was held in Washington, D.C.
More than 300 franchises looking to expand in the New York region will be exhibiting. The event is open to the public. Up to 10,000 attendees are expected to come to the convention.But before signing on the dotted line, there are several key points any franchisee should understand about buying into a system. Fisher lays out a few of the most important details to consider: What are the first steps to take after you make that decision to buy a franchise? Fisher: It's important to understand what your skill set is so you can look at opportunities that complement your skill set. You also need to consider the amount you have to invest in the business. That's incredibly important. In addition to what you might have in cash, often folks look to financing. While the financing market has been gloomier, we are seeing that loosen up -- there does appear to be companies that have financing available. There is also a unique way to garner financing by using your IRA. You need to gather some intelligence to figure out what you have to spend. Should a potential franchisee have all their financing in place before they approach a franchisor? Fisher: Smart franchisors have garnered relationships with lenders who understand their business model. [Banks that are not familiar with the franchisor] would have to invest a lot of resources to get to know the franchisor. It's hard to do that looking at a lot of disparate opportunities. While you might want to pull your credit report and have an idea of what your home equity line of credit is, until you start to dial in to a particular opportunity it's hard to get pre-approved. As part of the application process people make financial disclosures. Part of the approval process is [franchisors] will already be checking your assets and credit to approve you.
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