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Franchises
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Article 5: Franchisee Requirements
What’s
the franchisor require of you?
“The first thing he looks for is money,” says
Erwin Keup, franchise attorney. “They have to
get at least enough money to cover their cost
and training.” Credit checks and personal
references run a close second, Keup says.
Also high on a franchisor’s list of requirements
is whether you have relevant background and
experience to successfully tackle the challenge.
If a franchise makes widgets, it’s a good idea
to have a widget background. If the franchise
depends on sales call, it’s important to have
sales background. Background traits are
important to the franchisor to determine your
suitability. They’re also vitally important to
you if you expect to succeed.
Low-investment franchises require no different
legal requirements than do higher-end
franchises, says Steven Toporoff, FTC franchise
program coordinator.
“I’m not aware that there’s any real legal
distinctions between a low-end and more
expensive franchise,” Toporoff says. “The higher
the cost…the more risk there is for the
franchisor, who puts out a lot in training and
promotion. The higher the cost, the greater the
scrutiny of who they are willing to accept…”
Toporoff notes that franchisors “impose various
levels of control to make sure the system
works—uniforms, hours of operation, bookkeeping,
what kind of cash register…signage.”
But, don’t focus only on what the franchisor
requires. As a prospective franchisee, you
should do an honest self-evaluation. Ask
yourself:
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How much can
I afford to invest?
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How much
income do I require?
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What
business is right for me?
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Is my
background adequate?
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Do I have
necessary skills?
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Will I need
or want a partner?
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Will I need
financing?
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Do I prefer
to hire others?
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Do I have
management skills?
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How many
hours am I willing to work?
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Will this be
my primary income, or supplemental?
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