I read recently that in the current economic climate more people will be looking (or be forced) into becoming self employed and that as a result there will be an increase of franchise sales.

To those looking to buy a franchise I want to prove one point and to do this I have searched Google using various word strings and here are me findings:

Search term Google hits
Franchise (wwweb) 54,000,000
Franchise (uk only) 3,030,000
Good franchise (wwweb) 14,900,000
Good franchise (uk only) 406,000
Bad franchise (wwweb) 22,800,000
Bad franchise (uk only) 337,000
”Good franchise” (wwweb) 58,000
”Good franchise” (uk only) 1,790
”Bad franchise” (wwweb) 6,110
”Bad franchise” (uk only) 138

“So what?”, you may be asking. Well, to me the above findings prove that there are 54,000,000 articles about franchising and only 6,110 articles with the words “bad” and “franchise” next to each other. So does that make everybody happy?

Taking a smaller sample, I reviewed 12 of the 138 ‘co.uk’ domain names and not one of the articles had any negative information. In fact the phrase “good and bad franchise….da..da..da” results in the hits.

So does that mean that not a single person has written a personal account or blog of their experience of buying a bad franchise in the whole world? Well,…er..yes!

One thing that should be known before buying a franchise is that a franchise agreement is one of the most fearful legal documents in existence. For example, if a franchisee does not meet set targets then the franchiser, in some instances, has the power to take back the franchise and selling it on again. It is a fact that a franchisee has significantly weaker legal powers than a franchiser.

Now there are good and bad franchises but it is nearly impossible to find out which are the ones that take your money and leave you struggling (or broke) because franchisers employ solicitors to keep a ‘wall of silence’.

It is therefore a case of buyer beware! So these are my three precautionary edicts:

  • Question the motives of a franchiser paid £10,000 or £20,000 for a couple of weeks training and a mail shot. Who then earns a lifelong fee on all your sales
  • Beware of existing franchisees held out as proof that the franchise works – you wouldn’t be given the contact details of someone with a different view.
  • Don’t part with your cash in haste – consider calling me so that I may help you ask the right questions

If you have a family member or friend close to writing a cheque to buy a franchise then forward my article.

My final advice is research the business model thoroughly and really ask yourself, “For the same money, could I not go it alone?”

copyright ©2009

This article is for discussion purposes only and does not represent advice on which you should act without consulting a professional as tax legislation is complex and changes frequently.

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