A Des Moines Business Record article discussed the growing number of franchises in Iowa. The article also discusses some of the pros and cons of franchising. A critic of franching described it as "indentured servitude by contract". He stated that some franchisees have a tough time continuing in the business after the end of the franchise relationship. While the criticism does have some validity most franchises are agreeable to extending the franchise beyond the initial term if the franchisee is not in default.
The pros of franchising include access to a network of similarly situated business owners. You can also gain market share quickly with an established name. Many frachisors will also provide marketing and management support.
The key is to thoroughly investigate any franchise opportunity. You need to talk to as many franchisees as possible to determine if the franchisor will keep their word. I usually tell clients to keep talking to franchisees until you hear something bad (that way you can avoid mistakes and get an honest assessment of the opportunity). Review the UFOC and franchise agreement carefully. It is a good idea to have the UFOC and franchise agreement reviewed by an experienced franchise attorney. A franchise is a substantial investment so do not take the decision lightly.
Click here to read the franchising article at The Des Moines Business Record’s Website.