A classic janitorial franchise opportunities requires you to pay a fee to the franchisor for a “bundle” of cleaning accounts.
The fee is predicated just on the dollar value of cleanup accounts made available by the franchisor. The fee is typically half of the total salary the accounting entries are expected to produce in a year. For example, a $10,000 fee will get your accounts worth $20,000; a $15,000 fee will get you accounts worth $30,000. You may also be required to pay ongoing royalties or management fees.
The franchisor may provide you with financing. This may sound especially appealing if you are having difficulty obtaining credit from traditional lenders.
The sublessor is supposed to provide you with cleaning accounts that will generate the income level represented in the package you purchased. However, a variety of factors can have an impact on that income level. For instance, if you decline an account, the sublessor may not be required to offer you a substitute. Alternatively, if you keep refusing an acct even though you believe it is too far aside, you could lose your entitlement to that income. Furthermore, if you lose accts due to poor clean-up, the franchisor is not obligated to replace those accounts.
FRANCHISE RULE OF THE FTC
A franchisor is required by law to provide you with a detailed disclosure document.
- the total percentage of franchises, as well as the number of franchises terminated or just not renewed during the previous year;
- the bases and presumptions for any statements about earnings potential or the profits of established franchisees;
- the charge of starting and operating the business; and
- the monikers try to address, and phone numbers of at least 10 franchise owners who live closest to you (names, discusses, and phone numbers of at least 10 licensees who live near you).
- the experience and background of the franchisor’s key executives; • the franchisor’s fully audited financial statements; • any lawsuits filed by franchisees against the franchisor or its directors; and • the obligations you and the franchise owner have to each other when you’ve purchased the company.
Before you make any payments or legally commit to purchasing a franchise, you should have received the disclosure document for at least 10 business days. You should have ten business days to review the file, get answers, talk to franchisees, and ask for guidance from an attorney, auditor, or business advisor.
Purchasing a brand is a significant investment. Follow the following precautions before you commit: Peruse the firm’s disclosure document. Examine it thoroughly to learn further about your obligations, the franchisor’s litigation history, and failure rates. This information will assist you in determining whether franchise owners are unsatisfied with the franchise. Speak with other franchisees. Do not rely solely on the information provided by the franchisor. Inquire with former and current franchise owners regarding their interactions with the franchisor. Their names, phone numbers, and addresses must be included in the business revelation paper. The person may direct you to others who have proven to be successful. Don’t depend on the references provided by the business.