Franchise Buying Guide

Interview Both Sides of the Franchise Equation

You've researched your franchise choice on paper. Now get some real world information by talking to the franchisor and visiting current franchises.
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Guidant Financial specializes in helping entrepreneurs purchase new franchises using their retirement funds.

After you've received all the documents from the franchisor, you'll enter a preliminary negotiation stage before you sign. This is the most critical period in your dealings with the franchisor. At this point in time, you'll meet a representative of the franchisor and conduct interviews with as many franchisees as possible in order to evaluate the franchise package. This provides an opportunity for both you and the franchisor to form first impressions and determine whether negotiations will proceed any further.

The representative of the franchisor may be one of three people: the franchise owner/company president, an in-house salesperson or a franchise broker. No matter which one of these people you meet, he or she will want to know more specific information about you.

The franchisor is going to want to know more about your financial status, experience and general background. If the franchisor doesn't ask these questions or show any interest in your previous background, that should be a danger signal to you. When they do ask you questions regarding these topics, however, don't feel they are prying into your personal life. They aren't. They're just protecting their interests.

Prepare questions of your own about the company. You might even want to have your attorney present or have an attorney highlight areas of the franchise agreement and FDD that should be questioned. Don't leave until you've been supplied with all the information that you need. This could take anywhere from a few hours to a whole day. Your primary goal should be to satisfy all your doubts so that you feel comfortable with the data supplied by the franchisor.

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