How a Franchise Agreement and a Franchise Disclosure Document differ
There are two documents that are of vital importance...
Canada has a lot of different franchise opportunities to offer. The Canadian Franchise Association reports there are around 1,300 brands operating in the country, and exploring all those possibilities can seem daunting. Although it's a labour-intensive journey, it is necessary for you to find the best possible choice for you.
It's possible that consulting professional advisors for help during your search can be very beneficial, so as you embark on your exploration of all the brands Canada has to offer, here are three experts you may want to speak to.
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A franchise consultant/broker
For franchisees who don't know where to even start, working with a franchise consultant or broker can be a way to gain some exposure to the industry. These professionals serve as facilitators between brands and prospective franchisees, helping identify business opportunities to potential franchisees based on their backgrounds, interests and desired investment level. By narrowing down all the choices to a pool, they can help you streamline your search process considerably.
It is important to keep in mind, however, that these professionals aren't completely objective third parties in most cases. While their services may come at no cost to you, they do receive commissions from franchisors based on the delivery of qualified prospects. This means you may not be presented with the best opportunity for you personally and will instead see brands the professional has relationships with. Nevertheless, they can help expose you to the industry, and you're never required to agree to a brand just because you worked with a consultant or broker.
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A business advisor
There are naturally a lot of financial considerations when it comes to investing in a franchise. Understanding the financial commitments with buying and running a franchise is the only way to make a fully informed decision. Some key questions you will need to ask yourself at the start of your discovery process relate to what money you have to invest, what you can borrow and how you can qualify for financing in the form of loans and other products.
In this area, a business financial advisor can be very helpful. They will run the numbers, so to speak, so you know what is realistic for you personally. This can help you reduce risk and avoid opportunities that are not within your price range.
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A franchise attorney
When you reach the point in your search where you are engaging with a franchise that you are really excited about, it's time to review the franchise disclosure document (FDD). This is a binding document that will have a lot of information on the brand and your legal rights and relationship with them as a franchisee. Here, a franchise attorney can help you understand this large document so you're not caught off guard later.
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