The National Directory of Certified Public Accountants

Ask A CPA - Buying & Selling a Business

What Are Some Questions To Ask When Buying A Franchise ?

Does the franchise give you an exclusive territory for the length of the franchise period, or can the franchiser sell other franchises in your territory? Under what circumstances can you end the franchise contract, and at what costs to you? How many years has the firm offering you the franchise been in operation? If you sell your franchise, will you be compensated for your goodwill or will it be lost to you? Does the company offering you this franchise have a reputation for honesty and fair dealing among its franchisees? Has the franchiser shown you any certified figures indicating exact net profits of one or more of its members, and have you personally checked the figures with these people? Will the franchiser assist you with: a) A management training program? b) An employee training program? c) A public relations and advertising program? d) Capital? e) Credit? f) Merchandising ideas? If needed, will the franchiser assist you in finding a suitable location? Is the franchising firm adequately financed so that it can carry out its stated plans? Does the franchiser have experienced management, trained in depth? What can the franchiser do for you that you cannot do for yourself? Has the franchiser investigated you carefully enough to assure itself that you can successfully operate at a profit to both of you? Does your state have a law regulating the sale of franchises, and has the franchiser complied with that law to your satisfaction? How much equity capital will you need to purchase the franchise and operate it until your income equals your expenses?

If you need professional help with "Buying & Selling a Business" or have other tax questions, we can help you find a local licensed CPA for a free, no-obligation consultation.