Things to Consider When Investing in Franchising in Virginia Beach, VA
Starting a business can be an exciting, but daunting endeavor. One way to break into entrepreneurship without starting from scratch is franchising. With franchising, you will receive backing from an established and oftentimes national brand, as well as, receive training and support with your start-up and operations. For those interested in investing in a franchise opportunity in Virginia Beach, Virginia, there are a few key elements to consider before making the leap.
From researching potential franchisors to understanding the complexity of contractual agreements, there is a lot to consider before becoming a franchisee. Knowing what to look for will help you make the best decision for your business goals and long-term success as a franchisee.
Research Potential Franchisors
Due diligence is one of the most important steps in selecting the right franchisor and franchise opportunity. Investigating each franchisor is necessary to ensure that the company has the stability, track record of success, and brand recognition you need for a successful business.
The Federal Trade Commission provides a thorough guide of what to look for when researching a franchise. For starters, make sure the franchisor can provide a Franchise Disclosure Document (FDD). All franchisors operating in the U.S. are required to provide this document in accordance with federal law. The FDD details important information about the franchise program, such as:
– The business’s financial performance
– Accounting of any litigation or bankruptcy
– Franchise agreements
– Fees associated with the operating the franchise, such as royalties
Take the time to carefully read through the FDD to ensure you have a full understanding of the franchisor’s disclosure requirement.
Understand Contractual Agreements
The FDD will provide you with an overview of the franchisor’s contractual requirements, but you should also take the time to consult with a franchise and business attorney. Consulting with an attorney who specializes in franchising will provide you with an understanding of your legal obligations and rights under the Franchise Agreement; this is an invaluable asset for those seeking legal counsel on the nuances of the contract.
The Franchise Agreement is what legally binds the franchisee and franchisor. This document contains all the details for what is expected from both parties, including restrictions on territorial exclusivity and contractual duration. Franchising laws, along with the contract, provide the key pieces of information for the franchisee to understand the rules and regulations for operating the unwritten franchise agreement.
Evaluate Your Financing Options
No business venture is possible without the proper capital to back it, including franchising. Before you commit to a franchise, it is important to carefully consider your financing options and to assess your current financial situation.
For either an existing franchise that is up for sale or a unit that you are opening for the first time, the money must be available to cover the startup costs, operational expenses, and ongoing fees associated with the franchise. There are numerous sources of financing including banks, credit unions, online lenders, and even crowdfunding sites. It is important to explore each option and to find the finance fit that works best for you and your business. Additionally, a few franchisors may also offer the opportunity for you to delay royalty payments for a short period, give you access to discounted corporate supplies, and provide you with limited financing assistance.
Seek Professional Resources and Training
No one is expected to know the exact ins-and-outs of operating a franchise when they first become a franchisee. That is why one of the great perks of franchise ownership is the often comprehensive training and resources provided by the franchisor. Franchise owners should take advantage of these resources and tap into the network of existing owners to ice-breaker tips and tricks for success.
The business broker is another valuable asset for potential and existing franchisees. Working with a broker allows you to access their market intelligence and industry insights to make sure that you are selecting a franchise system that offers a business model that appeals to the consumer and provides a strong return-on-investment.
In the end
The key to finding the perfect franchise opportunity is to research, evaluate different options, and to understand the intricate details of the agreement. Take the time to understand the franchisor requirements and the obligations of your franchisee; you will be well ahead when the time comes to making the ultimate decision. By understanding the contractual agreement while making sure your financing plans are in place, you will have a greater chance for success when operating a franchise in Virginia Beach, Virginia.