What you need to know about buying a franchise

On the surface, buying a franchise may seem like a no-brainer, but it is a business decision that should be made seriously.

The state of New York is home to many franchise businesses. On practically any street corner, there are fast food restaurants, convenience stores, hardware stores, even educational centers and much more. There is no doubt that franchising is an attractive opportunity for many businesspeople. In fact, it may seem risk-free and lucrative. It can be low risk, but there are a few important things people interested in buying a franchise should know.

Some franchise businesses fail

According to research from many groups including the Small Business Administration, there is nowhere near a "guarantee" of success if someone franchises. In fact, it could be a power imbalance in the contracts between franchisor and franchisee that leads some franchises to fail. These contracts can be thorny and complex, giving potential franchisees little negotiation room.

The takeaway is that interested franchisees should always do their research into the franchisor. Some have much higher failure rates for their franchises than others do, and the contracts can be more flexible with some. It is rarely a good idea for a franchisee to sign a contract just because he or she likes the business and the potential income. Plenty of other franchises exist, and it is worth the time to find an opportunity that is more in sync.

It helps to chat with someone who has run a failed franchise. This person can share why the business failed and what could have been done differently.

The work is hard

Some people think that franchising is fairly easy because of the proven prototype, support system and contract that spells out everything that needs to be done. However, franchisees often must put in just as much sweat, labor, training and effort with their franchises as they would with a business they started from scratch. The hours can be long, and patience is necessary.

It can be one of the best experiences

The fact is that for many people, franchising is one of the best experiences of their lives. They did their research in picking a franchise right for them, had an attorney ensure the contract was as fair as possible, evaluated the level of risk they were comfortable with and knew if their personalities and work habits would fit the needs of the franchise.

When a franchise succeeds, the rewards can be tremendous financially, mentally and emotionally. When someone in New York is considering opening a franchise, no matter how small or big the investment is, the chances of success go up tremendously when both parties are happy with the contract. Potential franchisees should never sign without having an attorney vet the paperwork.