Thinking of investing in a franchise?
Be sure the franchiser doesn’t become your biggest competitor.
Here’s how that could happen and how to avert it…
A franchiser might compete with you by:
Selling what you’re selling on its Web site, which could cannibalize your sales. Why should people bother leaving their home or company to patronize your store when they can buy the product online from your franchiser?
Before investing, thoroughly examine the franchiser’s Web site to see if it is selling what you’d be selling, advised Richmond franchise attorney James Wilson, of Wilson Stoyanoff PLC.
Also, comb through its Uniform Franchise Offering Circular, a huge document telling all about the franchise, to see what the franchiser discloses about its online marketing. “I would try to dig into how much the sales are,” Wilson said.
f a franchiser grants you an exclusive franchise area but derives online sales from your ZIP code, “you ought to be getting something for it,” said Wilson. You may, or may not, succeed in negotiating a percentage of the franchiser’s sales derived from your area.
Is it automatically a deal breaker if the franchiser sells the same product online? Read more.
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