Franchise - breaking the contract
elvis1074 subscriber Posts: 3
edited January 2009 in Home-Based Businesses
I am considering investing in a franchise. This may sound defeatist, but what are the conditions that a franchisee can get out of a contract. If the business is floundering for 6-12 months and I am in financial distress would I be able to get out of the contract? Just curious. Thanks guys.
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that said - i just read that the #1 profitable franchise today is Quiznos....and you can get started for 65,000. what they don`t tell you is that you have to sign your life away working 7 days a week (80 hrs per week on average) to make the ROI they project in a 5 yr span.
More commonly, franchisees in distress may look to sell the business to another franchisee. This will require the approval of the franchisor, and typically an assignment fee (which in some cases the new owner can pay). At the end of the day, the franchisor loses if you lose, so the franchisor will usually work with you on this. I`ve worked with clients who have done just that.
There are many risks in opening a franchise, so you would be well advise to consult both an attorney and accountant to assist you.
Also be careful of signing a lease agreement. A business woman in California had her own business. It was very successful. After 11 years in business, she was approached by a large national chain. They would set her up in a new location. They would also give her enough money to replace all of her old equipment and hire more people to expand her business. There was only one catch. She would have to take the lease for the new location out in her name, not the national chain`s name. Her stored failed at the new location within the year and she was left on the hook for the lease.