Purchasing a Franchise – Home Business Insurance

Dear M & M:

I am thinking of purchasing a franchise. What are some things I need to do?

-Lisa

Dear Lisa: 

According to the Small Business Administration there are over 3,000 franchises in the US alone. Three important things to consider is what one will be the most profitable in your market, what one do you have any experience working in that industry and what one interests you the most? Comparison shopping would be beneficial. When evaluating a franchise look at historical profitability, franchise assistance, financial management, image, integrity, franchise upfront/ongoing monthly fees, the overall success of individual franchise stores and brand recognition of the franchise as a whole. Remember, you may own the franchise but the operation is governed by the terms of the franchise agreement. Franchises offer support systems, brand recognition, marketing assistance, and sometimes built in supplier channels for products and services. Remember franchises can restrict goods and services you sell, method of operations, sales area, site approval, design and appearance standards. “On average 97 percent of franchise businesses succeed after the first year with only 67 percent of small business sticking around. Look ahead a few years and the numbers become a bit more staggering with 23% and 18% after 5 and ten years for small business startups with franchises remaining in the nineties at 92% and 90% respectively for the 5 and 10 year marks”-www.smallbusinesssale.com   If you are a seasoned entrepreneur or simply someone looking to get their feet wet with a new small business, consider the advantages of going with an established franchise rather than taking the gamble of starting your own new business but beware of restrictions. Remember hard work, dedication and sacrifice are key elements to any successful business. Franchises do not bring those elements to the business you as the owner will have to furnish that part.

– M&M

Dear M & M:

I am opening a business in my home is it necessary to purchase insurance?

– Jack

Dear Jack: 

Your homeowner’s policy more than likely is covering you to live in the home not to conduct business out of your home. One would want to check with your insurance agent to let them know you are conducting a business out of the home. Many times equipment, inventory, and customer’s property in your home as part of doing your business may not be covered. Someone could be injured coming to your home to do business, making a delivery, or entering the premise as part of your business. They might not be covered as they would not have entered the property if you were not conducting business. There is an added risk of protecting property as well as protecting people from accident or injury. This is a case of oops I thought I had flood insurance. Check with your insurance company. Let them know you have an in home business. Describe the nature of your business and let the insurance company decide what they will cover and what they won’t before you engage in any in home business. Make sure property and people are covered if you are conducting business out of your home.

– M&M

To ask your questions: Call the Small Business Development Center(SBDC) at Cochise College (520)-515-5478 or email schmittm@cochise.edu or contact the Sierra Vista Economic Development Foundation(EDF) at 520-458-6948 or email  hollism@svedf.org

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