Month: June 2019

If you’re actively pursuing buying a gas station, excellent idea! But should you invest in a franchise or an independent station? To be as sure as possible that you’re making the right choice, take a bit of time studying detailed answers to questions similar to these:

Question #1: Who is responsible for environmental issues?

Environmental compliance issues are the biggest difficulty in buying a station. If you run afoul of environmental laws, and have to pay for costly clean-ups or new equipment, it could be the end of your enterprise. I’m not exaggerating! Here are a few instances that you may not have considered . . .

* Underground leaks. If one of your tanks leaks, who pays for the clean-up – you, or the gas company who sold you the franchise?

* New equipment. If every station in your state is suddenly required by law to install a new kind of vent for underground tanks, you will have to pay for that equipment if you’re an independent.

* Site remediation. If you sell your station, who pays for removing the underground tanks, cleaning up the soil and getting the certification that states your property’s remediation (clean up) has been approved by the state?

Question #2: If you buy a franchise, can you stop worrying about environmental problems?

In general, the answer to this question is yes. Your parent company (Exxon, Mobil, etc.) will install any new equipment that the state requires, and will step in to do the clean-up if one of your tanks suddenly develops a leak underground.

However, you should never make any assumptions in this area. You and your attorney have to comb through your franchising agreement to understand exactly what’s covered, and what’s not!

Question #3: If I’m buying an independent, what do I really own?

If you buy a small independent station with no ties to a major brand of gasoline, the answer to that question is relatively straightforward. You’re probably buying the business as an entity, as well as the real estate where the business is located, along with the tanks, pumps and other equipment that you’ll need to sell gasoline. However, the picture can become complicated somewhat if you are buying the business, but not the real estate (land, buildings). You and your attorney need to pin everything down.

Question #4: If I am buying a franchise station, what do I really own?

The answers to this question can be more complicated than you’d expect. After you purchase, for instance, you may end up owning the building – but not the land and equipment, which are owned by the parent company. Or you could lease the building and the land, but have the canopies, pumps and other equipment owned by the parent company.

Remember, different franchising organizations set up their ownership packages in entirely different ways. To find out if the deal is right for you, you’ll need to go over all franchise plans and documents closely with your attorney.

Question #5: If it’s a franchise, who pays for what?

If you buy a franchise, you’ll probably be surprised to find out about all the things that your parent company expects you to pay for. Some or all of these items might not be covered, so be sure to ask ahead of time:

1. Insurance and Repairs – You may have to pay to insure and maintain the parent company’s pumps, signs and canopies.

2. Rent Increases – If the parent company leases you the grounds and buildings, be prepared to get hit with significant rent increases every two to three years. Make sure you get these terms clearly spelled out in the franchise agreement.

3. Promotional Items – When the parent company decides to sell a new kind of coffee in your convenience store, or to offer special gas discounts on Tuesdays, and decides to advertise those offerings with special signs – will you be responsible for paying for them?

4. Payroll and Benefits – Don’t expect the parent company to pay salaries or provide benefits for your employees. It’s the one area where you’ll find that you’re suddenly operating like an independent business.

Copyright (c) 2009 Richard K Parker

The way a franchise works is you take on the brand of an established business in order to run your own branch.

However you will be required to give a percentage of the profits you make to the parent company, and also to run the business under their guidance and within a firm set of rules.

This alone puts some people off, but if you like the rigid feel of a franchise then it could be the best kind of business to opt for. But before you can throw open the doors for your first day, you have to choose the business you want to work in.

This is the moment where it becomes obvious that specialist franchising legal advice is absolutely essential. Even if you know which area of business you want to go into, you will undoubtedly find that there are several options to consider in that field. For example let’s suppose you want to have a food and drinks business of some kind. In this case you may have narrowed down your selection to three potential franchises. Specialist franchising lawyers will be able to look over each possibility with you and advise you on the pros and cons of each one. Instead of simply signing the contract of the opportunity you like the most, you will be able to see whether there are any legal problems that exist first -for example other problems in the contract with the term of the agreement or with the level of payments expected under the franchise contract.

Even after you have chosen your ideal franchise, there are still other areas where good franchising legal advice can come in extremely handy. For example you will normally need to lease premises to run your business from. Franchising lawyers, or the conveyancing colleagues, can help you here too. Every franchise is different and even if you have run one before you should still seek franchising legal advice before getting into another one. It is by far the safest path to choose, and it can save you a lot of time and effort.

There are other aspects you may need to consult your lawyers on as well. For example you may well need to take on employees to help you run your business. There are various aspects of employment law to bear in mind in this case, and your franchising lawyers will be able to steer you through every situation.

In short, you have to ask yourself whether you can really do without getting the right franchising legal advice.

Business franchising, in various forms, has been around for decades, and it proves an eternally popular business vehicle for start-ups and for those looking to break out of the 9-to-5 rut. It hosts its own range of advantages and disadvantages, of which it is important to take notice before committing to purchase. Likewise for the franchisor, the business model has notable advantages that many businesses might at some time like to consider, as a more effective way of growing the business over a short period of time.

Business franchising is a less risky way to start a business. If youre considering giving up your job to work for yourself, you might like to consider business franchising options that may be available. Business franchising allows you to run a branch of someone elses business, providing you with a blueprint business plan thats been tried, tested and is successful in other areas. It also gives you an opportunity to benefit from the experience and industry knowledge of the franchisor, which you would otherwise have to gain from your own experiences in business or in the employment arena.

An additional advantage to business franchising is that a number of high street banks support most major franchising opportunities, and are more willing to lend money to cover the franchise fee and start-up costs than they would be with other businesses and enterprises. That means you will be more likely to obtain funding for all your initial costs if you elect to run a business franchise rather than opting to go it alone straight from the off.

For the franchisor, business franchising can be a profitable and useful model to adopt. Firstly, it can raise substantial capital in the form of franchise fees, which can often run into the tens of thousands. This can be used to finance the development of the franchise opportunity, and can also make the promoter of the franchise particularly wealthy. Additionally, many business franchising opportunities also require a proportion of revenues to be paid from each franchisee in royalties, providing an on-going income to the business.

On the business side of things, business franchising allows a business to achieve rapid but controlled growth, which would be simply impossible were it to be effected organically. While it does mean giving up some control of the way the business is run, particularly at an individual franchise level, it nevertheless allows the business to grow geographically and in terms of revenues over a very short period of time. With the right franchisees, business franchising can prove lucrative as well as being an excellent way to prompt and maintain growth.

Considering the advantages of business franchising, it would appear to be a particularly useful model for all parties concerned. While that is the case, its also important to bear in mind the disadvantages, such as the lack of absolute freedom on both sides of the fence and the risk that either side to the deal might turnout to be wrong for the relationship. Nevertheless business franchising will continue to prove a popular way of doing business.