The options available to entrepreneurs seeking franchise opportunities in the computer and internet sector have expanded significantly in recent years. Not only can you purchase a general business-to-business information technology (IT) services franchise, but there are now industry-specific computer and internet franchises available as well.

While there are benefits to purchasing a franchise, these benefits come at a cost. Likewise, while some franchise systems have proven track records, start-up franchise systems typically have less to offer to their franchisees. Buying a franchise requires careful planning and thorough due diligence, and all prospective franchisees should seek legal advice from an experienced franchise lawyer before committing to a long-term franchise relationship.

10 Considerations when Purchasing a Computer-Based Franchise

When considering a franchise opportunity, there are numerous issues to consider. The following are 10 of the top issues for entrepreneurs contemplating computer and internet franchise opportunities:

1. Territorial Rights

Will you receive a protected territory? If so, is it exclusive, or are there circumstances in which you could potentially face competition from the franchisor or other franchisees? Many “exclusive territory” provisions are subject to exclusions that allow franchisors to use “alternate channels of distribution” to compete with their franchisees.

2. Initial Investment Costs

How much is the initial investment? How much of that investment is an up-front payment to the franchisor? While initial franchise fees are standard, these fees should be designed to cover the franchisor’s costs in getting a new franchisee up and running – not as a profit center for the franchisor.

3. Mandatory Upgrades

As technology evolves, will you be required to make additional capital investments in your franchise? Franchisors will often reserve the right to require their franchisees to make mandatory upgrades with limited notice and unlimited frequency.

4. Ongoing Fees and Costs

Beyond the initial investment and cost of mandatory upgrades, will you be able to cover your royalty fees, marketing fund contributions and operating expenses and still pay yourself a reasonable salary?

5. Termination Rights

It is unlikely that you will have termination rights, so let’s talk about the franchisor. When can the franchisor terminate your franchise? Does the franchise agreement identify specific defaults; or, does the franchisor have broad discretion to send you a notice of termination?

6. Renewal Rights

When your franchise agreement expires, what will it take to renew? Franchise agreements’ renewal provisions often have so many conditions that franchisees’ renewal “rights” are hardly rights at all.

7. Competitive Restrictions

When your franchise agreement expires (or your franchisor terminates your agreement), will you be able to stay in the computer and internet field? Or, will you be subject to a non-compete that prevents you from earning a living off of your education and experience?

8. Franchisor Support

What support, if any, is the franchisor required to provide during the term of your franchise? Do the franchisor’s personnel have sufficient knowledge and experience to provide meaningful support? Or, will you effectively be on your own?

9. Franchise System Data

How quickly is the franchise system growing? Have franchisees left the system? If so, why? Sales, renewal, expiration and termination statistics can tell you a lot about the viability of a franchise opportunity.

10. Dispute Resolution

Finally, what does the franchise agreement say about dispute resolution? If you need to enforce your rights against your franchisor, can you go to court? Or, will you be required to split the cost of an arbitration panel in your franchisor’s hometown?

Computer and Internet Franchise Opportunities

A random perusal of computer and Internet franchises identified online brings up the following:

  • CMIT Solutions – A computer support franchise opportunity providing small businesses with product solutions and technical assistance.
  • CPR Cell Phone Repair – An established brand offering cell phone repair franchise opportunities nationwide.
  • Fast-teks – A well-known franchise opportunity offering on-site computer set-up, troubleshooting and repair services.
  • LifeLine – A cell phone franchise specializing in iPhone accessories and repairs.
  • WSI Internet – An internet consulting franchise system with a global presence offering B2B franchise opportunities throughout the United States.

Inquire about the Goldstein Law Firm’s Flat-Fee Franchise Review Services

The above list is by no means exhaustive, and individuals considering franchise opportunities must make sure that they are fully aware of the risks involved. If you would like to speak with national franchisee lawyer Jeffrey M. Goldstein about your computer-based franchise opportunity, call the Goldstein Law Firm at (202) 293-3947 or inquire about our flat-fee services online today.

Disclaimer: The identification of any franchise or company on this website is not an endorsement of any aspect of that entity in any regard, nor should it be taken as one.

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