FAQs For Purchasing A Franchise

  1. Q: What is a franchise?

    A: A franchise is Franchisor’s trade name, products and list of suppliers, and methodology. The Franchisee (buyer) licenses these from Franchisor when Franchisee purchases the franchise. Common industries that franchise are restaurants, fitness/health centers, day cares, salons, pet supplies, tax services, construction products professional services, and retail outlets.

  2. Q: What is the uniform franchise offering circular (UFOC)?

    A: The UFOC is a document required by the Federal Trade Commission because of prior abuse by Franchisors who made unfounded promises to unwitting buyers of franchises. The UFOC is the main document the Franchisee should read. It has disclosures about the Franchisor’s history, the details of the costs involved in the franchise, and the Franchisee’s responsibilities during the franchise.

  3. Q: What is the average length of time of a franchise?

    A: Ten to fifteen years.

  4. Q: What are the costs to start up the franchise business?

    A: The initial franchise fees are generally $10,000.00 -$100,000.00, and they are not the only significant fee. Rather there are other start up and ongoing costs. These costs can be found usually in items 5, 6 and 7 of UFOC and can include ongoing royalties and start up costs. Start up costs could include training costs, attorney fees, inventory, equipment and lease build out.

  5. Q: Does the Franchisor sign the lease for Franchisee’s business?

    A: Generally, no.

  6. Q: Can the Franchisee set its own price for the franchise products depending on its local demographics?

    A: Generally, no.

  7. Q: Are there other lump sums payable after the franchise term has begun?

    A: Generally yes, for example, remodeling if a store is involved.

  8. Q: What happens if the Franchisee dies?

    A: Generally the franchise agreement contains a right to buy the franchise back by the Franchisor; therefore, the Franchisee’s family or heirs do not inherit the franchise.

  9. Q: Can the Franchisee sell, or terminate the franchise?

    A: Generally, no.

  10. Q: Can the Franchises compete against the Franchisor when the franchise is over?

    A: Generally, no and this restriction can be a huge detriment to the Franchisee who is skilled in that one industry.

  11. Q: What is the experience of the law firm of Badeaux and Associates?

    A: We will read the UFOC, franchise agreement and its numerous exhibits, and will advise you on the common pitfalls that can make the purchase of a franchise a potential financial disaster.

Feel free to give us a call at: 281-486-4737