Should I Buy a Franchise or Start My Own Business?

franchise, DuPage County business lawyersThere are numerous advantages to being a business owner. For example, it can be disheartening to work for another person or company. You may feel unappreciated by your superiors or frustrated at the inefficient way you are expected to do your job. When you own a business, you get to be your own boss. You control how your business is operated and managed.

However, owning a business also comes with a great deal of responsibility and liability. You may need to spend a tremendous amount of time and resources for only marginal growth—especially at first. If you are thinking about becoming a business owner, two options you may be considering are buying a franchise or starting your own business. There are benefits and drawbacks to both of these choices, all of which should be fully researched before you make a commitment to either path.

Do You Want Input and Guidance from a Franchisor?

The most significant difference between buying a franchise location of an existing business and starting your own business is the amount of control you have over the business. While you may still have power over some day-to-day aspects of a franchise, the major decisions about business practices, operations, marketing, and accounting will be made by the franchisor. Only you can know if this type of business relationship is right for you. Do you feel capable of developing your own business model from scratch or do you want guidance and oversight from a business organization that is already successfully established?

How Much Time and Money Are You Willing to Invest in Your Business?

Starting your own business gives you much more freedom than buying a franchise. However, this freedom comes with a remarkable about of accountability, both personally and financially. Take time to determine how much money you are realistically willing and able to invest in your business. Also consider the level of risk you are comfortable accepting. A great number of new businesses fail within the first five years of operation. Whether you are considering buying an existing business, a franchise location, or starting your own business, never jump into a new business venture without exhaustive investigation into what will be expected of you.

Contact a DuPage County Business Lawyer

Becoming a business owner is probably one of the biggest decisions you will ever make. To get the legal support you need to make your business ownership dreams a reality, contact Stock, Carlson, Oldfield & McGrath LLC today. Call our office at 630-665-2500 to schedule a confidential consultation with and experienced Wheaton business law attorney.

 

Sources:

https://www.entrepreneur.com/article/286212

https://www.score.org/resource/should-you-buy-business-or-start-one-scratch

How Can a Non-Disclosure Agreement Protect My Business During an Acquisition or Business Merger?

non-disclosure, DuPage County mergers and acquisitions lawyersIf you are a business owner, you have probably poured a great deal of your time and money into growing your business. If you are considering a business merger or acquisition, it is essential that you take steps to protect your business. During a business transaction, confidential and proprietary information is often discussed. You may even share trade secrets or access to confidential software or computer files. In situations such as these, a non-disclosure agreement may be needed to ensure that the company given access to valuable information does not use it to your detriment.   

Acquisitions and Mergers

The terms “merger” and “acquisition” are often misunderstood. Many people assume that these words mean the same thing, but there are important differences between these two processes. When one company purchases another company, this is referred to as an acquisition. The company that was purchased no longer exists.

A strategic remix acquisition involves the buyer purchasing a business and then integrating the operations and product line into its own business. A private equity acquisition involves the purchase of a company which is improved and then sold at a higher cost for profit. An alphabet acquisition is an agreement between the two companies that contains elements of a strategic remix acquisition and private equity acquisition.

When two companies join together to form one new company, this is called a merger. In 2017, Dow Chemical and DuPont merged into the company DowDuPont. This $130 billion merger was one of the largest mergers to occur in the last several decades.

A Non-Disclosure Agreement Can Protect Your Interests

In a business transaction such as a merger or acquisition, confidential information such manufacturing processes, formulas, designs, patent applications, business strategies, proprietary information, and vendor and customer lists may need to be shared with the other party. In order to ensure that this information is not used to the disclosing party’s disadvantage, many mergers and acquisitions involve non-disclosure agreements. Also called confidentiality agreements or NDAs, non-disclosure agreements identify what information is confidential and may not be shared with other third parties.

An NDA may also contain provisions requiring the recipient party to destroy or return confidential information at the request of the disclosing party. If the recipient party breaches a non-disclosure agreement, such as by using the confidential information to start a business very similar to the disclosing business, the disclosing business has the right to seek monetary damages.

Contact a DuPage County Business Law Attorney

For help with drafting a non-disclosure agreement, buying or selling an existing business, and more, contact Stock, Carlson, Oldfield & McGrath, LLC. Call 630-665-2500 today to schedule a consultation with an experienced Wheaton business lawyer to discuss your needs.

 

Sources:

https://www.investopedia.com/investing/biggest-mergers-in-history/

https://www.forbes.com/sites/allbusiness/2017/10/28/non-disclosure-agreements-for-mergers-and-acquisitions/

Thinking of Buying a Business? Watch Out for These Warning Signs

buying a business, Wheaton business lawyersAre you considering buying a business? Being a business owner is a challenging and rewarding career, but it can also be a risky endeavor. Many entrepreneurs purchase a standalone company or a franchise location with the best intentions, but then later realize that they have gotten into something they wish they could get out of. While you are on the hunt for your new business venture, make sure to be on the lookout for the following telltale signs that a particular business purchase is not in your best interest.

The Franchisor Seems Focused Only on Upfront Fees

Many potential business owners choose to invest in a franchise location of an existing company because it is often less risky than investing in a standalone company. When you buy a franchise, you already have an established brand and business model. Furthermore, you will likely receive guidance, supplies, and training from the corporate team. However, an unprofessional or incompetent franchisor can nearly ruin your chances of success. If the franchisor you are considering purchasing from offers to decrease future royalties in exchange for increased upfront fees, this could be a red flag that the company is desperate for funds.

The Deal Feels Too Good to Be True

In business, when something seems too good to be true, it usually is. Make sure to do your due diligence and research any potential businesses thoroughly. Check that the information provided by the current owner matches financial documentation and records. If you can, look at the last five years of the company’s federal and state tax returns. When a deal seems impossibly good, this is usually an indication that you are missing part of the puzzle.

The Current Business Owner Lies or Withholds Information

Anyone selling a business should expect to provide potential buyers with ample information about the business. If a business owner is not interested in providing you the information you need to make an informed decision, he or she may be hiding something. Business owners who are worried about sharing sensitive financial data or other company information should utilize a nondisclosure contract to protect themselves. Concerns over confidentiality is not a valid excuse for withholding critical information from potential buyers. The owner should also be able to tell you why he or she is selling. An owner who cannot answer this question may be selling because the business is already failing.

Contact a DuPage County Business Lawyer

For help with buying a business or for other business law concerns, speak with an experienced Wheaton business law attorney from Stock, Carlson, Oldfield and McGrath LLC. Call 630-665-2500 today to schedule a consultation with our knowledgeable team of business law professionals.

Sources:

https://www.entrepreneur.com/article/195020

https://www.forbes.com/sites/chrismyers/2018/07/06/the-top-ten-red-flags-to-watch-out-for-when-buying-a-franchise/