Last week we went through the first half of the Franchise Disclosure Agreement and what to look for. Here we breakdown the other half and tell you what to look out for before signing on to be a franchise owner.
Item 11
You’ll definitely need support from your franchisor in your business, this area will tell you exactly what you can expect. This will also outline where your marketing fees will be going, and it should let you know how involved you’ll be in managing the national marketing fund. You should be involved in some of the marketing decisions that get made for your franchise.
Item 12
This tells you what your territory is and whether or not other franchisors can open in the same area. Some types of franchises offer exclusive territories and others don’t. If you’re hoping for exclusivity, this is the section that will tell you what you can get.
Items 13 and 14
These are your trademark and copyright restrictions. This section should be very straightforward unless your franchisor doesn’t have trademarks (which would be a red flag).
Item 15
Your franchisor wants you to be devoted full-time to their business. This section will tell you whether you need to be the one running the business yourself or if you can be a passive owner and hire someone else to manage the day-today- business.
Item 16
This will tell you what you can and cannot sell. You should already know this based on your previous research.
Item 17
Here you will find a chart that explains your relationship to the franchisor, including terms of renewal and termination. It will also tell you how the franchisor deals with disputes. Some methods (like arbitration) could be costly. You should also feel free to contact a franchisee and ask how the franchisor has settled disputes in the past. You should also be aware that as a franchisee, you’re not the one renewing. You only have a right of first refusal when it comes time to sign a new contract.
Item 18
This will only matter if you’re buying into a franchise that uses public figures in their advertising (hint: that’s less than 1% of franchises so you probably don’t have to worry about it).
Item 19
You could say this is one of the most important things in the franchise disclosure document. This will tell you what other franchisees are making. Not every franchisor disclosures this information, but if they don’t they have to state so here. Make sure you’re comparing franchisee earnings to stores similar to the one you’re thinking of opening. Stores that are in similar areas and have recently opened. Locations that have been in business for 5-10 years won’t be an accurate barometer of what you can make in the early days.
Item 20
This should give you an accurate picture of the overall franchise network, and whether it’s getting bigger or smaller. This will also give you a list of current and former franchisees, which you should feel free to contact to get advice on opening your own location.
Item 21
Good old financial statements. You’ll find a profit and loss statement and a balance sheet. You may want to get your financial advisor to look at these reports and let you know if the franchise you’re buying into is stable and profitable.
Item 22 and 23
These are all of the contracts you have to sign as well as the receipt for the actual franchise disclosure document. Make sure you understand everything you’re signing. Get your lawyer and financial advisor involved to help make sure you’re making a sound investment.
If you’re happy with your franchise agreement and there’s nothing out of the ordinary in the franchise disclosure document, congratulations! You’re well on your way to being a small business owner. If you’re thinking about opening a franchise, or franchising your current business, get a free consultation today and we can help.
Parties and other events are a great way to engage and reward employees and customers, and it’s also an opportunity to find tax deductions. But the tax rules for such events are strict and require careful planning and navigation to ensure you can claim your deductions with confidence.
Read on how to deduct the cost of a business party while also being conscious of potential tax deductions.
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The various taxes that small businesses have to pay out each year are significant, so it’s important to be aware of every opportunity the tax man gives you to reduce your bill. So be sure to consider whether any or all of the items in this checklist apply to your business and discuss them with your bookkeeper and accountant to ensure you are documenting and claiming every deduction available to you.
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With tax season approaching, you will want to take advantage of any and all deductions legally available to you. And if you aren’t satisfied with this year’s write-offs, you’ll want to start looking ahead next year to ensure you are aware of and actively documenting everything you could be deducting.
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Financial fraud is the number one consumer complaint in the United States, and it can have devastating consequences for victims.
But by being proactive and following some simple steps, you can make it much more difficult for criminals to steal your money or your identity. Read about implementing some measures to protect you!
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Now is the time to start thinking about the coming year, and what changes you could make to reduce your bill next time the taxman comes around.
Take a look at several ways businesses are reducing their tax burden.
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Good financial reporting can help a business track what is really important for profitability and guide good decision-making for the future. Many small businesses struggle to really take full advantage of their financial reporting.
Take a look at five tips that could make the difference in whether your financial reports tick boxes or truly help drive growth.
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Accounting and invoicing for general contractors have always been a paperwork-intensive process, tracking various construction-specific tasks like estimates, sourcing subcontractors, handling change orders, and partial-completion invoicing.
Let’s take a closer look at what makes construction invoicing different – and difficult – and consider a few highly-regarded apps that are worth considering, not only for invoicing but potentially for the entire end-to-end construction process, from submitting bids to paying contractors to customer relations.
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Filing as an S Corp eliminates the self-employment tax on all income that many small businesses pay, while at the same time keeping some income out of reach of things like Medicare and Social Security taxes. It offers you the opportunity to take part of your income as a W-2 salary, with the associated federal program taxes, and the rest of it as distributions that are not subject to those taxes.
As with most “great deals,” though, there are potential pitfalls. It’s important to take the process seriously and abide by the rules in order to reap the benefits while avoiding some very serious penalties.
Let’s take a look at the benefits and potential pitfalls of filing as an S Corp, and how you can pay yourself in a way that maximizes your tax benefits while minimizing your compliance risks.
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Filing as an S Corp eliminates the self-employment tax on all income that many small businesses pay, while at the same time keeping some income out of reach of things like Medicare and Social Security taxes. It offers you the opportunity to take part of your income as a W-2 salary, with the associated federal program taxes, and the rest of it as distributions that are not subject to those taxes.
As with most “great deals,” though, there are potential pitfalls. It’s important to take the process seriously and abide by the rules in order to reap the benefits while avoiding some very serious penalties.
Let’s take a look at the benefits and potential pitfalls of filing as an S Corp, and how you can pay yourself in a way that maximizes your tax benefits while minimizing your compliance risks.
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