Tip: Look For Trouble When Buying A Franchise

It’s something you need to do before you plop down $150,000-$250,000 on a franchise business. Even if you don’t want to.

I Know Why You Don’t Want To

You want to be your own boss so bad, you’re willing to overlook some obvious flaws in the franchise opportunity you’re focused on. I get it. I understand. It’s your baggage.

FYI: You’re bringing some of your baggage with you on this journey. This journey of becoming the owner of a business.

Maybe your baggage includes an ugly corporate downsizing or two. Maybe you hate your job so much you’re willing to do almost anything to be done with it. Maybe it’s something else. But, it’s baggage. And, for some, it’s really, really heavy.

However…

When you’re investigating a franchise opportunity, you need to find out all you can about the company…the executive team, and-this is a biggie, any past-or current litigation

Legal Troubles

That’s right; you have to do some digging into the franchisors background, legally-speaking. You have to see if there’s any past legal troubles. But, it’s not that hard to dig…to do a little investigating.

For example, you can use your favorite search engine and key in the name of the franchise followed by the word, “lawsuits” In addition to the word “lawsuits” you can type in “scams” “legal troubles” “litigation”- anything you can think of that will allow past issues with judges and/or courtrooms to surface.

Bonus!

Did you know that all current litigation is generally disclosed in the 200–300 page document that you’ll be receiving as a prospective franchise owner. This document is called the Franchise Disclosure Document, or FDD.

You should read- Buying A Franchise? Don’t Freak Out About The FDD

The FDD has a specific section on litigation…lawsuits. See what’s in there. Ask the franchise attorney you hire to dig a little, too. You never know what will turn up. (Maybe nothing) (Hopefully nothing…nothing big)

I wrote an article about franchise lawsuits (the link to it is below), and the importance of learning all you can about them-if there are any. For example, are there any lawsuits in which the franchisor you’re interested in partnering with sued franchisees? Or, (and this is never a good sign), are there numerous lawsuits from the franchisees themselves?

You better find out. Before you make a commitment to buying the franchise you’re focused on.

Article- Franchise Advice: Count The Number of Lawsuits Against The Franchisor https://www.thefranchiseking.com/franchise-advice-count-the-number-of-lawsuits-against-the-franchisor

(The Franchise King®, Joel Libava, is a top franchise expert, the author of Become A Franchise Owner! (Wiley Publishing), and owns and operates Franchise Business University, where you can increase your franchise IQ with the online franchise courses offered there.)