Monthly Archives: October 2022
According to a recent article in the Franchise Times, a group of Cell Phone Repair franchisees has sued the franchisor’s parent company alleging that it misled them into incurring substantial additional costs. As reported, the franchisees allege that the franchisor’s parent company—Assurant, which insures cell phones and other mobile devices—promised to send insured customers to their franchised outlets for covered repairs. However, after franchisees invested in preparing their stores to manage this additional volume, the plaintiffs allege that Assurant reversed course and decided to handle these covered repairs in-house.
Unlike most things, when you buy a franchise, you do not own it permanently. Sooner or later, your contractual relationship with the franchisor will come to an end. When this happens, you will be subject to various post-expiration contractual requirements, and, depending on the circumstances, you could potentially face other post-expiration risks as well.
Now that it has been a few years since colleges first started offering certificate and degree programs in franchising, we are seeing more graduates forego the job market and pursue franchise ownership. If you are a recent graduate—or if you are preparing to graduate after the upcoming spring semester—and are thinking about buying a franchise, there are some facts you need to know that you most likely didn’t learn in school.
When evaluating a franchise opportunity, one of the most important questions you need to ask yourself is, “Do I realistically think I will be able to earn a living?” Operating a franchise entails paying numerous expenses—including not only ordinary business expenses like wages and inventory but also royalty fees, advertising fund contributions and other franchisor-imposed costs. If you need to take out a loan to launch your franchise, this will add to your monthly costs (and your financial risk) as well.
If you are looking for information about buying a franchise online, you will find plenty of articles about the advantages of franchise ownership. But, you likely won’t find much about the disadvantages of buying a franchise. So, what are these disadvantages? Here is an overview of what prospective franchisees need to know.
If you are thinking about buying a franchise and trying to manage your upfront costs, you may be on the fence about hiring a franchise lawyer. You don’t want to pay for any services you don’t truly need, and you aren’t sure if hiring a lawyer to review the Franchise Disclosure Document (FDD) and franchise agreement falls into this category.