After
your business plan is ready, it's time
to become a detective. Time to get a
list together of a trusted attorney,
accountant, and perhaps a close, business-savvy
friend who will give you honest information.
DO NOT try to absorb all of this on
your own!
Use
your advisors to carefully discuss the:
-
Start up costs of the franchise
-
License fees for the franchise
-
Leases and Rent
-
Construction and improvements
-
Fitness Equipment
-
Office Equipment for operating the
franchise business.
-
Training and Travel costs
-
Franchise operation manuals
-
Franchise on-line resources, such
as a support forum
-
How the fitness franchise handles
support/help inquiries.
(The
franchise
comparison grid compares some of
these, but you'll need much more detail
than this simple grid provides.)
Evaluate CONTINUING COSTS related to
the franchisor such as:
Do you have to buy supplies from
the franchisor?
In cases where the franchise
uses its volume purchasing power,
this is a good thing, but if they
use it as a way to make money, you
can often buy supplies elsewhere.
Find out what the rules are and
ask specific examples.
What are your rights when it comes
to renewing your franchise license?
If your franchise is especially
lucrative, for example, does the
franchisor have the right to cancel
your agreement and sell the franchise
to an investor?
What are your rights when it comes
to selling the franchise later if
your life changes?
What are the restrictions? Can
you reveal financial information
to the buyer?
Further
investigate these companies including
their financial statements, and the
financial and training assistance they
offer. Look carefully at the success
and track record of the franchisors,
their financial condition, and how much
initial capital is required.
The
disclosure document (UFOC)
should be obtained and read in detail.
Research items such
as renewal rights, franchisor control
and quality control of the operation
and enforcement policy.
When you begin to
look for financing, keep in mind that
any outside funding source is going
to want proof that you have carefully
planned your business. You can
get a lot of guidance from your franchisor
on this, but you need to do your research
in addition.
Have
an accurate idea of what your own assets
are -- this could be real estate, retirement
and savings accounts, vehicles, and
other investments. If you have a large
amount of assets, financing will be
easier. Later
you may want to consider
small business working capital advance
programs, such as credit card factoring.
DEBT VERSUS EQUITY FINANCING
You
may also take on investors who buy shares
in your business. This is called "equity
financing" as opposed to "debt
financing"
or borrowing money. This means that
you may lose control of the business.
Any agreements should be in writing.
Notice: Curves and Contours Express
offer expedited loan application processes
via the Small Business Association.
This can help you take advantage of
opportunities.
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