The New Year brings new opportunities, and for many people, this means buying a franchise. This is especially true heading into 2023, with many continuing to explore alternatives to traditional employment due to the economic and societal impacts of the COVID-19 pandemic.
What To Consider When Buying a Franchise in 2023
If you are thinking about buying a franchise in 2023, what do you need to know? Here are seven important considerations from attorney Jeffrey M. Goldstein:
1. Does the Franchise Concept Have Staying Power?
As franchising continues to grow in popularity, we are seeing more and more start-up franchise concepts. Many of these concepts are designed to profit off of fads and trends, and this means that they don’t necessarily have staying power. If you are considering a trendy franchise, it will be important to make sure you are confident in its long-term potential.
2. Is the Franchise System Sound?
Along with analyzing the franchise concept, you will also need to analyze the franchise system. Does the franchisor have a strong and recognizable brand? Does it have real-world-tested business methods and products? Are its executives experienced in the franchise industry? These are all important factors to consider.
3. Are Any Major Changes On the Horizon?
Recently, we have seen a trend of franchisors adopting new technologies—everything from AI ordering systems to “automated pizza dispensers.” Before you invest in a franchise, you will want to try to make sure that you will not have to make a significant additional investment in new technology shortly after you sign.
4. How Will You Finance Your Franchise?
Speaking of investment, how will you finance your franchise? While there are several options, some of these options are smarter than others. Small Business Administration (SBA) loans are good options for many first-time franchise buyers, and there are special programs available to veterans and other populations as well.
5. What Are the Terms of the Franchise Agreement?
When buying a franchise, it is extremely important to make sure you understand the terms of your franchise agreement. This means hiring a lawyer to conduct a thorough franchise agreement review. Depending on the terms of the agreement, you may need to have your lawyer negotiate the agreement as well.
6. What Do Current and Former Franchisees Say About Their Experience?
One of the best ways to gather information about a franchise opportunity is to speak with current and former franchisees. You can (and should) ask lots of questions, and you should avoid letting the franchisor steer you toward its top performers only.
7. Are You Prepared for a Long-Term Commitment?
Finally, it is important to understand that buying a franchise is a long-term commitment. You will be locked in for the duration of your franchise agreement, and it could easily take this long (or longer) to recoup your initial investment.
Request a Free Consultation About Your Franchise Opportunity
Are you thinking about buying a franchise in 2023? If so, we encourage you to contact us for more information. Please call 202-293-3947 or contact us online to get started with a free consultation.
