Prospective business owners in Maryland might not want to start a business from the ground up. One way to do this is by purchasing a franchise.
Since there are so many franchises across the nation and around the world, it is easy to believe this is a pathway to success. In some instances, it is. In others, there is great risk involved. Before proceeding, it is important to understand key points about buying a franchise.
Know the rules before buying a franchise
When buying a franchise, there will be upfront costs and stipulations in a contract. In their excitement, franchisees could pay and sign before knowing what they are getting into. The fine print in a contract could leave the person vulnerable to long-term financial pain if they fail to have experienced assistance in assessing it.
The state requires that a franchise in Maryland be registered with the Securities Division. An unscrupulous seller might try to get a person to buy the franchise before having full knowledge of whether it is registered. The Securities Division also has specific documents that must be filed with it when a business is being sold as a franchise.
There are many ways for fraud to occur and being protected against illegal behavior can be essential. For example, the franchisor must give the purchaser full disclosure when they first meet or a minimum of 10 days before agreeing to a contract or giving any payments. In the disclosure, the franchisor is required to give information about their business, identify who is running it, what the history is, if there was past litigation, how much the investment must be and more.
Franchisors cannot give a detailed number for how much will be earned or what the profits will be without ironclad facts to support it. The records need to be analyzed for accuracy and there must be proof of validity. The franchisor must also give the purchaser the contact information for a minimum of 100 franchisees in the area. This can help the potential franchisee garner information as to whether they want to proceed and give details about what they may face.
Having professionals assess the opportunity can help with deciding on what to do
People frequently make mistakes when they are trying to get involved in a business. The rules put in place by the Securities Division are meant to protect them, but there can still be missteps. For full protection with the franchisees interests in mind, it is useful to have professional help from those experienced in business and commercial law.