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Questions To Ask Before Starting A Home Based Franchise

Written by Ken Gaebler
Published: 6/9/2010

Home-based franchises are often legit, but buyers should exercise caution when considering purchasing a home-based franchise opportunity.

While starting a home-based franchise can cost as little as $5,000 - good news for entrepreneurs researching storefront costs - and are designed to be profitable, Inc.com reports there are a number of questions that potential owners should ask before signing up.

Questions to Ask When Buying a Home-Based Franchise

Inc.com reports that all franchisors are mandated to give all potential owners their franchise disclosure document - or FDD - at least 10 days before an agreement is signed. The FDD will lay out all of the relevant information about a potential issues such as geographical limitations, royalties, advertising funding and franchise success rates.

The American Franchisee Association says that there are a number of specific provisions that could cause problems for owners, such as gag orders, kickbacks, and major changes that take effect after a franchise is renewed. Inc.com says that other points potential owners should consider are termination rules, travel costs and continuing fees.

Franchises continue to grow throughout the world. The International Franchise Association says that by the end of 2010, the number of U.S. franchises is expected to top 901,000 - a 2 percent rise compared with 2009 - and account for more than $868 billion in goods.

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