Interested in Buying a Franchise? Call a Franchise Attorney Today!

Numbers and statistics play an important role in shaping public policy and opinion in the modern age. Because they are supposedly complied by experts, most folks accept them without question. This numerical credulity can be dangerous, since many popular statistics are inaccurate or just plain wrong. Take for example the restaurant-failure myth. For decades, people quoted a statistic that said that 90 percent of American restaurants fail in the first year. No one really knew who said it first, but they repeated it so often it became an unquestioned fact. The only problem was it wasn’t true. In fact, it wasn’t even close. Most modern studies have found that only around twenty-five percent of restaurants close their doors in the first year. Of course, opening a new business is still quite risky. Hard work alone many not be enough to ensure success. It is for this reason that many potential business owners consider franchising as an option. While far from foolproof, this proven business practice is probably less risky than starting up a new company. How does it work? Franchising is the quickest and often safest way for a company to expand into new territories. Instead of taking the time to build each new location and to train the staff, they simply give qualified applicants the legal authorization to sell their products and/or services for a fee. The concept is effective because the new owner doesn’t have to invest untold sums to attract new customers, since most folks are already familiar with the brand and its products. Some of the top franchises have failure rates that are in the single digits, which is well below the national average. However, it is important to not fall prey to the numbers game. Even if they sell similar products, two franchises can have drastically different failure rates. For example, Subway sandwich shops have a failure rate of around 7 percent, while Blimpie sandwich shops have a failure rate of 46 percent. How could this be? They both sell pretty much the same things. There are dozens of different factors that determine the success or failure of a new franchisee, and not all of it depends on the products or services they offer. Proven franchises generally take a much more active role in how their franchises are run. More often than not, they will help the new owner train his staff, assistant him in obtaining financing, keep him abreast of marketing plans, and even help him scout new site locations. They take these extra steps because growing franchises have a vested interest in a new owner’s success. Not only does it mean more in franchise fees, it may also result in future expansion. Multiple owners are the single most important group for franchisors. These are owners who have proved that they can operate profitable franchises and are therefore encouraged to open additional stores. As exciting as the prospect of owning a popular franchise location may be, you should never sign anything without consulting a franchise attorney. There are tens of thousands of franchisors in America and all of them ask their franchisees to sign contracts or agreements. Some of these contracts are negotiable, while others are set in stone. An experienced franchise attorney can peruse these documents for you to make sure everything is copacetic. What might they find? As a general rule, the more restrictive a franchise contract, the better. It might sound strange, but franchisors that actually care about the success of their new owners are more likely to make them sign non-negotiable contracts. They do this because they have complete confidence in their business models, but only if it is followed to the letter. An experienced franchise attorney or business litigation lawyer will be able to determine how much training and support the franchisor will provide.