Buying a franchise requires careful consideration of a multitude of business, financial and legal factors. Prospective buyers need to make informed decisions that take all of these considerations into account. On the business side, location is a top priority (even for mobile franchises), and this is especially true when buying a franchise in a major city like Chicago.
But, the location of your franchise can have legal implications as well. This is why it is important to work with a Chicago franchise attorney throughout the buying process. For example, if you are buying a franchise in Chicago, the definition of your protected or exclusive territory will be extremely important. With this in mind, here are seven tips for choosing a franchise opportunity:
1. Critically Assess the Competition
In Chicago, the markets for several types of goods and services are heavily saturated. For example, Chicago is known for its restaurants, and there are numerous business services franchises vying for business on the Magnificent Mile. Does this mean that you won’t be successful as a restaurant or business services franchisee? Not necessarily. Does it mean that you will need to choose your franchise opportunity carefully? Absolutely.
2. Critically Assess and Compare Your Top Choices
This brings us to our second point. When buying a franchise, it is important not to narrow down your options—or focus on one specific franchise concept—too soon. Instead, you should assess and compare multiple competing opportunities within your chosen niche. From the franchisor’s leadership team to the terms of the franchise agreement, numerous different factors can assess the viability and desirability of a franchise; and, if you get emotionally invested before you make an informed buying decision, you could end up buying a franchise that isn’t poised for success in Chicago.
3. Focus on Location Availability and Territory Rights
While Chicago is a major city, there is only so much real estate available. If you are thinking about buying into a franchise system that already has outlets in Chicago, location availability and territory rights will be critical factors. If there are only a few territories left, there is probably a reason why these haven’t sold when others have. On the same token, if the commercial rent for your ideal location is prohibitively expensive, then you will need to shift your focus elsewhere.
4. Focus on the Local Market for the Franchise’s Goods or Services
Regardless of the level of competition you will face in Chicago, it will be important for you to conduct your own independent assessment of the local market for your chosen franchise’s goods or services. The post-pandemic world is very different from the world as we knew it in 2019, and many well-established franchise outlets are now struggling on their last legs.
At the same time, tourism is coming back strong, and there are new opportunities out there. For example, remote business services and delivery services are in high demand. Certain food categories are also fairing particularly well, though it is important to consider whether these categories reflect trends with staying power or passing fads.
5. Talk to Lots of Other Franchisees
As a prospective franchisee, it is important to talk to lots of other franchisees in the system you ultimately decide to pursue. This includes both current and former franchisees, and it includes specifically franchisees who have experience operating in Chicago. If you will be the first franchisee in Chicago, then try to make contact with both franchisees in other major cities and franchisees in other areas of Illinois—as both of these groups will likely have key insights to share.
6. Negotiate the Franchise Agreement
Despite what the franchisor’s sales representatives may tell you, you can—and should—negotiate your franchise agreement. Before you sign, it is imperative to make sure not only that you have a clear understanding of your contractual rights, restrictions and obligations, but also that you attempt to negotiate any provisions that are unreasonable, unworkable or unfair. While few franchise agreement provisions are likely to be true “dealbreakers” on their own, if the franchisor is unwilling to negotiate in good faith (especially on matters such as territory rights and post-termination liability), this could be a bad sign for the future of your franchisor-franchisee relationship.
7. Get Help from an Experienced Chicago Franchise Attorney
Finally, to ensure that you are making an informed buying decision, it is best to work closely with an experienced Chicago franchise attorney. Your attorney can help you thoroughly assess all of the considerations discussed above, and your attorney can work to negotiate your franchise agreement on your behalf. At Goldstein Law Firm, we offer fixed-fee franchise business review packages for prospective franchisees, and you can get started with a consultation.
Request a Free Consultation with Chicago Franchise Attorney Jeffrey M. Goldstein
If you would like to schedule a free consultation at Goldstein Law Firm, please call 202-293-3947 or contact us online. We will arrange for you to speak with Chicago franchise attorney Jeffrey M. Goldstein in confidence as soon as possible.