If you’ve spent the past two years working from home (or watching others work from home while you toiled away at the office), you may be thinking about buying a home-based franchise. If so, here are some important considerations to keep in mind.
7 Important Considerations for Buying a Home-Based Franchise
1. You Need to Be Passionate About the Business
Whether you are working for someone else or running your own business, it is easy to get distracted when working from home. To make sure you will be able to devote the time and effort necessary to make your franchise a success, you will need to be passionate about the business.
2. You Need to Have Enough Space
Operating any type of franchise from home requires dedicated space. When evaluating franchise opportunities, you will want to consider the business’s needs in light of the space you have available.
3. It Needs to Be Okay with Your HOA or COA
Some homeowners’ associations (HOAs) and condo owners’ associations (COAs) prohibit residents from operating home-based businesses. Others place restrictions around things like parking business vehicles in driveways and storing trailers on residents’ property. If you have an HOA or COA, you will need to make sure you can operate your franchise within the rules that apply.
4. You Will Need to Carefully Define Your Territory
As a franchisee, you may be restricted to operating within a protected or exclusive territory. If this is the case, you will need to define your territory very carefully. In many cases, it won’t make sense to base a territory on the location of a franchisee’s home—particularly when a franchisee lives in a rural or widely dispersed area.
5. You Will Need Your Home to Have Business Capabilities
From any necessary equipment to adequate data security, you will need your home to have the requisite business capabilities. As a franchisee, you need to strictly comply with the franchisor’s operating standards, and you do not want your customers to learn that their personal information has been compromised because you stuck with a basic home internet plan.
6. You Will Need to Be Careful When Preparing Your Business Taxes
While home-based franchisees can claim various business deductions, they need to be careful when doing so. If you improperly claim a home office deduction or meal expenses, for example, you could find yourself in trouble with the IRS (which could also put your franchise in jeopardy).
7. It Will Be Extremely Important to Review and Negotiate Your Franchise Agreement
Given the unique aspects of operating a home-based franchise, it will be extremely important to review and negotiate your franchise agreement. You need to make sure you will be able to operate your franchise successfully, and you do not want to get yourself into a long-term commitment that creates problems from the beginning.
Inquire About Our Fixed-Fee Franchise Business Review Packages for Prospective Franchisees
If you are thinking about buying a home-based franchise, we encourage you to inquire about our fixed-fee franchise business review packages for prospective franchisees. To speak with attorney Jeffrey M. Goldstein in confidence, please call 202-293-3947 or request a free initial consultation online today.