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What are the risks of franchises?

No startup is a sure thing, but if you plan to invest your time and money in opening a business in Miami, Florida, you may be considering the benefits of a franchise. It is impossible to thoroughly explore an option without comparing positives and negatives, and according to MarketWatch.com, franchise agreements are not without their own high stakes.

Having the support of an established brand when entering the market could give you the leg up you need. Franchises do not necessarily come with a better success rate, though. In addition to the expenses of starting any business, you can also expect to pay fees, royalties and other costs. Some data indicates that entrepreneurs who go their own route have less chance of defaulting on loans and closing their doors.

Experts recommend contacting at least 10 franchisees, including those who are unhappy with the system, or even those who are no longer in business. This strategy is likely to provide you with key answers, such as how long it typically takes to become profitable, or what issues led to closure.

A franchise agreement is written with the best interests of the parent company in mind. While you are entering into a partnership with the franchiser, you must still approach the deal with the plan to protect yourself. For example, there may be some factors that are negotiable, and you may be able to improve your chances of success by addressing these.

Due to the potentially complex nature of the contract, it may help to hire an advisor or even a team of professionals to go over the documents with you and make sure you are getting your money’s worth out of the deal. While considering this information, it is important to understand that it has been provided for educational purposes only and should not be taken as legal advice.

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