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The Benefits and Drawbacks of Purchasing a Franchise in Connecticut

Posted on in Business Law

Long Island Sound business franchise attorney

Becoming a business owner can be one of the most meaningful career moves of your life. Owning your own business allows you to control how your business is run, decide how your employees are managed, and steer the business in the direction that you want. When buying a business, potential owners have two options: purchase a standalone business or a franchise location. There are both positives and negatives associated with purchasing a franchise business. It is important for anyone considering such a big purchase to research what owning a franchise business entails.

Franchised Businesses Have an Established Business Model

When a business becomes very successful, the owner may choose to franchise the company. This allows other private owners to purchase the rights to operate a franchise location of the larger parent company. Many first-time business owners find the option of buying an existing franchise location especially attractive. Unlike buying or starting an independent business, you will not need to create a business model from scratch when purchasing a franchise. An effective, reproducible business model already exists. In many franchise purchases, formal training from the parent company and ongoing support are also available. Of course, if you are someone who desires a great deal of freedom in how your business is run, you may not wish to be confined by a parent company.

Brand Name and Immediate Recognition

Another major benefit of franchise locations is that they come with a pre-existing customer base. For example, if you purchase a McDonald’s franchise, you can safely assume that most people will be familiar with the restaurant. Buying a franchise location of a larger parent company means that you will not need to spend as much time educating potential customers about your particular products or services. On the other hand, if potential customers have had a negative experience with another franchise location of the company, they may prejudge your business negatively.

Parent Company Rules and Regulations

The biggest difference between buying a franchise and a standalone business is the amount of independence and freedom that the owner has. If you purchase a franchise, you will be required to follow certain guidelines set forth by the parent company. You may not have complete control over your pricing, hours of operation, business location, layout, and signage. You may also be required to use franchisor-supplied products and abide by certain resale conditions. The established structure and rules of a franchise business may be an advantage or disadvantage, depending on your entrepreneurial and personal goals.  

Contact a Stamford, CT Business Lawyer

For sound legal guidance regarding business sales and purchases, business entity formations, contract review and drafting, and more, contact The Law Offices of Peter V. Lathouris, LLC. We have more than 30 years of experience successfully helping business owners grow and protect their businesses. Whether it is a mom-and-pop store or a franchise, it is important to understand the legal aspects of buying and owning a company. To schedule a free consultation with a knowledgeable Fairfield County business acquisition attorney, call us today at 203-359-204.

 

Sources:
https://www.ftc.gov/tips-advice/business-center/guidance/consumers-guide-buying-franchise
https://www.entrepreneur.com/article/36328

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