Invest Franchise Home Care Path

The franchise business systems for sale in the United States have greatly increased. Seniors can be approached by family to invest in a franchise system. Seniors should ask if the franchise is SBA (Small Business Administration) eligible. Franchise systems approved by the SBA should be listed on The Franchise Registry. The Franchise Registry should indicate the date the franchise you are considering was put on the registry. This should include any updates and the franchisor contact information. Note that a portion of the Franchise Registry is private and used only by SBA staff and SBA lenders. There is a three part test the SBA uses on a system to determine franchise eligibility.
1. Is the agreement a franchise agreement (it provides a product or service critical to the borrowers operation, so substantially affects the borrowers ability to repay the debt, and has a critical trademark. )
2. Does the franchisee have the right to profit from its efforts and bear risk of loss commensurate with ownership (excessive franchise fees are charges, transfer is limited or not allowed, franchisor can disallow sale in its sole discretion, franchisor controls sale price of business, franchisor charges excessive liquidating damages, under these circumstances the franchisee and franchisor may be affiliated)
3. Are there any factors such as excessive restraint on transfer or franchisee's operations that give control to the franchisor (Royalty fees in excess of 15 percent are considered excessive, co if you pay 12 percent royalty monthly and are mandated to invest 7 percent in advertising, you are at 19 percent which is excessive)
the SBA will require a franchise agreement to contain Consent by Franchisor for transfer will not be unreasonably withheld. Franchisors cannot control the price that the francise system can be resold for. The franchisor can never set the franchisee's net proft, or directly hire the franchisees employees. Although SBA Small Business Administration approval does provide some credibility to the franchise system, the Senior cand Family are responsible for conducting complete due diligence. Most franchise systems will offer a reduction in up front fees to start immediately. A typical franchise sytem asks for a 10 year committment. The senior and family should never rush in to a franchise agreement.