Like any other type of business, a franchise comes with its advantages and disadvantages. But when deciding on whether to purchase a restaurant franchise, there are certain factors that potential franchisees must fully evaluate before making their final decision. Follow along for what you should know before opening a restaurant franchise and how one of the proficient franchise acquisition attorneys at FortmanSpann, LLC, can help you in determining whether this is a sound decision.
What should I know before opening a franchise?
There are general precautions that must be taken before opening any franchise, not just that of a restaurant. They are as follows:
- A franchise is a long-term commitment: that is, you will be required to pay a franchisor even if you are losing money. So, if you have a 10-year agreement but run out of money after 3 years, you will still have to pay a franchisor liquidated damages for seven more years.
- A franchise may not meet the expectations of the sales pitch: that is, you are required to sign off on the fact that you will not measure the success of your franchise according to the sales pitch you received. Instead, you will only be provided with what is included in the contract.
- A franchise contract may not be written in your favor: that is, you will be at the mercy of the franchisor.
What are the advantages and disadvantages of opening a restaurant franchise?
With that being said, some advantages and disadvantages are unique to opening a restaurant franchise. They are as follows:
- Most restaurant franchises have a well-known or established name. So, potential customers may automatically know whether they want to eat your product.
- Funding a restaurant franchise may be simple, as banks usually know what operating one entails. So, a bank may feel more comfortable with approving your loan request.
- Most restaurant franchises are supplied with a solid amount of training and support.
- Some restaurant franchises still have a long way to go when it comes to establishing brand recognition. So, you may have to put in that extra effort to retain customers and build your reputation.
- Some banks are difficult with it comes to handing out loans. So, they may recommend that you finance your restaurant franchise via an equity loan on your home.
- Some restaurant franchisors miss the mark when it comes to the resources they offer.
All of this just stresses the importance of doing your research before buying into a restaurant franchise. Luckily, one of the talented franchise law attorneys can help you with this. When you retain our services, we will analyze all documents from the franchisor, the financial condition of the franchisor, the overall reputation of the franchisor, and much more. So schedule your initial consultation with us today.