Question

1) What are some of the questions that need to be answered when deciding whether to buy a business?

2) Identify and explain what some of the major advantages of franchising are.

3) Identify and explain what some of the major disadvantages of franchising are.

Make it least 200-250 words, more is fine if it goes over. Thanks a ton!

Answer 1

1. Various questions that need to be answered when deciding whether to buy a business. A buyer must ask questions to the seller that why he is selling the business, history of the business, how old is the business and much more. Buyer can question on the financial performance of the business. That the business is profitable or net etc. Can ask questions related to the price of the business. Assets given by the seller. And before buying the business the buyer must ask himself that the business is really profitable, competitors, and can you afford to buy the business, given your personal and family constraints?

2. Advantages of franchising are:-

Franchisees handle the research and funding for outlets in your chain, which means you do not have to spend your own capital or request additional funding from banks or investors in order to grow your business.

The risk of business failure is reduced by franchising. Your business is based on a proven idea. You can check how successful other franchises are before committing yourself.

the franchisee provides all the capital required to open and operate a unit, it allows companies to grow using the resources of others. By using other people’s money, the franchisor can grow largely unfettered by debt.

3. Disadvantages of franchising are :-

Costs may be higher than you expect. As well as the initial costs of buying the franchise, you pay continuing management service fees and you may have to agree to buy products from the franchisor.

Some franchisors exert a great degree of control. No decision can be taken by the franchisees without consulting the franchisor.

Franchises are regulated by state and federal laws, requiring the development of a Franchise Disclosure Document (FDD) and other Regulatory Documents with the help of an attorney.