Rush on Business

Law Firm Social Media Strategy

rush.nigut@brickgentrylaw.com (Rush Nigut) — Wed, 08 May 2013 07:29:30 -0600

I am speaking at the Iowa Bar Association's Bridge the Gap seminar on May 9, 2013 on The Lessons I've Learned From Seven Years of Legal Blogging.

I am excited about the presentation as it is the first time I've spoken on legal blogging for a couple of years. I've given numerous presentations about social media and the law over the past several years but at the end of the day it's fun to discuss why lawyers should blog and how it can be done effectively.

I'd also suggest watching this short video on Law Firm Social Media Strategy from the LXBN Network. The video has a couple of excellent tips for lawyers to remember when using social media.

Make sure your social media efforts line up with the rest of your client development strategy.
Provide value on the subjects and industries where your clients are looking for it.

The Franchise King Reveals 20 Must-Do Things Before Buying a Franchise

rush.nigut@brickgentrylaw.com (Rush Nigut) — Thu, 25 Apr 2013 12:54:08 -0600

Joel Libava (a/k/a "The Franchise King") has a list of 20 Must-Do Things Before You Buy a Franchise. It's a great list so I thought I'd share the article with you.

The last item on his list is to "Lawyer Up". Joel explains that the franchisor has a lawyer so franchisees should too. He also says to find a franchise lawyer rather than just any business lawyer. Both are excellent pieces of advice.

My experience is that often prospective franchisees are reluctant to hire a lawyer because they don't believe the franchise agreement can be negotiated. This isn't always the case. I've worked with a number of franchisors who are willing to negotiate certain terms in their franchise agreements. Additionally, it's important to understand what certain provisions mean. For example, you may believe you have a "fully protected territory", yet the franchise agreement may have provisions that limit this territorial protection. If you are investing a substantial amount of your life savings, isn't it worth a legal review to understand exactly what it is you're buying?

But most of all I like how Joel has set out a step-by-step plan for someone to explore franchise ownership. It's not for everyone. Franchise operations fail at roughly the same rate as independent businesses. So it's critically important to look inside yourself, examine your finances carefully and choose a franchise that fits within your talents and financial means should you decide to pursue franchise ownership.

Due Diligence Training Through Plains Angels: Classes of Stock and Corporate Structure

rush.nigut@brickgentrylaw.com (Rush Nigut) — Tue, 23 Apr 2013 07:40:10 -0600

Those interested in raising investment capital for their business, or those interested in making investments in businesses, may want to take advantage of the monthly due diligence/investor training provided by Plains Angels.

Plains Angels is a group of Midwest angel investors that have now funded various projects here in the Midwest. The group is actively taking applications for companies seeking investment money and it appears the quality of the companies being considered is improving each month.

This month's due diligence session covers Classes of Stock and Corporate Structure. The presenters will discuss various rights offered to preferred shareholders and the impact of those rights over the long term, including liquidation preferences, preferred distributions, management rights, and the tax consequences of those rights for different entity types. The presentation will also discuss the impact of future capital raises on the angel investors depending on their rights.

This training session will be held Thursday, April 25, 2013 from 8:30 a.m. - 11:00 a.m. at the Greater Des Moines Partnership, 700 Locust Street in Downtown Des Moines. You can check out the schedule of events at https://tikly.co/plainsangels. Tickets cost $15.00 for each session.

Unique Look at Multi-Unit Franchisees: Empire Builders

rush.nigut@brickgentrylaw.com (Rush Nigut) — Mon, 22 Apr 2013 08:28:18 -0600

I recommend prospective franchisees take a look at Empire Builders which is a series of videos highlighting successful multi-unit franchisees.

Most of the prospective franchisees that come to see me are seeking to purchase a single franchise. Many of them dream of becoming a multi-unit owners but usually lack the capital (at least initially) to make that a reality. It's interesting to hear from multi-unit owners who have been able to harness the power of the franchising model and achieve great success. It is easier said than done.

There are some great videos in the series covering topics such as:

Challenges for franchisees;
Advice to new franchisees;
Choosing the right brands and many more.

Is a Franchise a Safe Investment?

rush.nigut@brickgentrylaw.com (Rush Nigut) — Wed, 03 Apr 2013 07:26:02 -0600

Potential franchisees should read this article from Robert Purvin on Franchising Myth One: Franchises are Safe Investments. In the article, Purvin discusses how franchises and independent businesses fail at roughly the same rate (something discussed at length in several of my blog posts).

It's critical that prospective franchisees understand that buying a franchise will not automatically increase your chances of success. I hear time and time again from people about how franchises have a "system" and "they will help me with marketing and getting customers". It's not always the case.

Purvin gives some good advice to help avoid mistakes when deciding whether to buy a franchise operation:

When you and your franchise attorney are reviewing the Franchise Disclosure Document, don’t limit your investigation to the closure rates. Look at the profitability of each location, especially those that serve in markets similar to yours. Do your due diligence and speak with current and past franchisees. Ask them direct questions about their profitability. It is especially critical to talk to past franchise owners and to ask them why they left the franchise. If you get any sense that the franchisees had trouble making a profit, then think very carefully before moving ahead.

Most importantly, insist that your prospective franchisor provide you with sufficient data to evaluate the profitability of the business. Limit your search to franchisors that make financial performance representations (formerly called ‘earnings claims'). There are many franchise opportunities available that are able to authentically boast high rates of success and profitability. These tend to be the top tier franchisors that require the highest investments and strictly limit their franchisee pool. As you go down the rungs of the franchising ladder to less well-known brands, new franchisors, and those with very low rates of entry, the risks typically grow.

Understanding that buying a franchise, just like starting any business, carries significant risk is the first step. You could lose your money. I see it happen to franchisees frequently. Be sure to approach buying a franchise just like it was your very own. Because in the end it will be up to you, not the system, to make it successful.

How to Effectively Get Your Agreements in Writing

rush.nigut@brickgentrylaw.com (Rush Nigut) — Mon, 25 Mar 2013 17:56:20 -0600

If you read article after article on business law you will see "Get it in Writing" near the top of the list in advice that lawyers routinely dispense to business owners. Indeed, a quick search of this blog produced 28 entries dealing with "getting it in writing".

My experience is that many business owners would love to get their agreements in writing but they are often frightened about the cost. Some business owners will resort to self-help services but there's no substitute for a experienced business lawyer writing your agreement(s). (Self-serving but true).

So how do you effectively get a written agreement completed with the help of a lawyer? Here are a few tips:

Identify your goals. What are you trying to accomplish with the agreement? If you are unsure about your goals it's often more difficult for the lawyer to provide assistance.
Identify the most significant terms and outline them. What terms does the lawyer need to be most concerned about? If something isn't a significant risk or concern then make sure the lawyer knows that. If a particular issue isn't as important be sure the lawyer isn't engaging in a protracted negotiation on that issue with the other side. There may also be risks you are willing to live with in order to get a deal done. Make sure your lawyer knows your thoughts on those risks. Otherwise, most lawyers are going to do everything in their power to protect you as a client and try to get you the most favorably language. Sometimes that can cause issues and problems with the other side.
Try to negotiate as many terms as possible with the other party before drafting the agreement. Lawyers love to negotiate and haggle. Therefore it is beneficial if the parties have already agreed on the terms and language on important terms. It limits the amount of negotiation a lawyer may be inclined to undertake on behalf of his or her client. It's pretty helpful for your lawyer to be able to say to the other lawyer that the parties have already agreed on that issue.

These are just a few simple tips. The key is to communicate with the lawyer. Remember it's your agreement. A good business lawyer will do his or her best to find the balance between protecting you and getting the deal done.

U.S. Patent Law Changes: The First-Inventor-to-File One Year Grace Period

rush.nigut@brickgentrylaw.com (Rush Nigut) — Fri, 22 Mar 2013 09:36:51 -0600

* This is a guest post from Jessica Susie of the Brick Gentry Law Firm. Jessica is a registered patent attorney.

The America Invents Act, which President Obama signed into law on September 16, 2011, has been gradually overhauling the United States patent system. March 16, 2013 marked the biggest change – the United States switched from a first-to-invent to a first-inventor-to-file system. Subject to some limited exceptions, the first-inventor-to-file his patent application will be entitled to patent protection, even against an earlier inventor who later files. With the switch, the requirements for patentability have also been revised. Inventions still must be novel, nonobvious, and useful to secure patent protection. However, the definitions of what constitutes a “novel” and “nonobvious” invention are now different. In particular, the one year statutory bar, also called the grace period and on-sale bar, has changed.

Previously, an inventor had a one year grace period after disclosure of an invention in which to file his application. Disclosures included printed publications in the United States and foreign countries, public use in the United States, and sales or offers for sale in the United States. Importantly, it did not matter who made these disclosures. In practice, most businesses associated the statutory bar with their own actions – one year from putting a product on the market or publishing a journal article, the application was due. However, what many businesses and inventors may not have realized, is that the one year grace period also affected the prior art used by the United States Patent and Trademark Office (USPTO). “Prior art” is a term used in patent law to describe information that has been made available to the public and that is relevant to a particular application. It may include previous patent applications and patents, journal articles, books, and event websites. In most situations, the USPTO examined applications using prior art references dated earlier than one year prior to an application’s filing date.

However, the new one year grace period only applies to certain disclosures, namely those that originate with an inventor. The one year grace period applies if (1) the disclosure was made by an inventor or a third party who obtained the subject matter from an inventor or (2) the disclosure, although not traceable to an inventor, was made after a disclosure by an inventor or a third party who obtained the subject matter from the inventor. The policy behind these rules is the hope that they will promote early disclosure of inventions to the public, which will increase innovation in the United States.

So, what does this mean for businesses going forward?

The USPTO will consider more recent prior art when examining applications.
Public disclosures by businesses must be documented. All businesses should have procedures in place to document inventions as they are made. However, it will be more important to document when and to whom disclosures are made as part of these procedures. Having this information may determine the outcome of prosecution of a patent application or many years down the line in a patent infringement proceeding.
Confidentiality remains critical. Businesses should have a confidentiality agreement on file to use during private disclosures.
Consider provisional patent applications more often. The USPTO does not examine provisional patent applications, and oftentimes they are much less detailed than nonprovisional patent applications. A provisional patent application secures a filing date and is useful when an invention is in its early stages. A related nonprovisional patent application must be filed within one year of the provisional patent application to benefit from the provisional filing date.
Do not rush to disclose inventions if you intend to file a patent application and have not yet done so. While disclosure may have benefits in some situations, the law is just too new in this area right now to know all of the negatives associated with disclosure.

How to Deal with Partner Disputes

rush.nigut@brickgentrylaw.com (Rush Nigut) — Thu, 21 Mar 2013 08:38:35 -0600

I saw an interesting article on the LexBlog Network regarding how to deal with partner disputes. The post written by Texas restaurant lawyer, Matthew Sanderson, dealt specifically with restaurants, but the information contained in the post is applicable to any business. Sanderson recommends the following when a dispute occurs:

Avoid the conflict by identifying motivators and doing your homework;
Open the lines of communication;
Stand up for yourself and your rights (but don't lose your cool).

I often compare partnerships to a marriage. In any marriage good communication is essential to maintaining a happy household. Where I've seen partnership disputes fester and cause problems is when the partners fail to communicate with one another. So I think Sanderson's bullet points are right on target.

Further, a helpful piece of advice for avoiding partnership disputes is to set clear expectations of what each partner is bringing to the table. Even though it isn't a part of your typical operating or shareholder agreement, you may what a letter of understanding defining the roles of each partner. Partnerships work best when the partners have complementary strengths. For example, a strong sales person combined with strong operations or details person may have a strong partnership together where two partners with the same skill set lack the balance needed to run the overall business.

Partnerships are not easy. Be sure to have a partnership agreement in place that details what happens if a dispute occurs or the partnership ends due to death, disability or other reasons. Sanderson's last point on not losing your cool is especially important. Make sure you think things through before you react and hopefully you'll be able to avoid costly mistakes if a partnership dispute occurs.

Avoid these 5 Legal Mistakes that Entrepreneurs Often Make

rush.nigut@brickgentrylaw.com (Rush Nigut) — Tue, 19 Mar 2013 08:00:00 -0600

Entrepreneur Magazine has a good article on Five Overlooked Legal Mistakes Entrepreneurs Make. Those mistakes include:

Making handshake deals with clients and vendors;
Choosing the wrong business structure;
Bring on partners without a detailed agreement;
Establishing a 50/50 partnership;
Filing a trademark without doing enough homework.

In my practice I've seen the mistakes outlined above cause significant problems for entrepreneurs. Getting agreements in writing is one of the easiest things you can do to avoid legal mistakes, whether it's with clients and vendors or partners.

I find it refreshing that the lawyer quoted in the business structure section prefers setting up corporations most of the time for her clients. LLCs are formed roughly at a 2 to 1 rate compared to corporations in Iowa and I'm sure nationally that trend follows as well. In many cases, a corporation may be preferable to the LLC. It all depends on the circumstances. All too often people are quick to form a business entity without much thought or investigation. My experience, however, it's best to speak with a business lawyer and accountant prior to forming your business structure to see what best meets your needs.

The trademark issue is also a great one to point out. My experience is that most entrepreneurs fail to check whether their trademark is available with the U.S. Trademark office. This often results in problems if the business name or trademark infringes on another mark. If an entrepreneur has invested significant dollars in marketing and branding, that mistake can be very costly. So it is helpful advice to speak with a business attorney and/or trademark attorney to determine the availability of obtaining a trademark for your business name.

Plains Angels Investing in Iowa Companies

rush.nigut@brickgentrylaw.com (Rush Nigut) — Mon, 18 Mar 2013 10:42:48 -0600

The Des Moines Register reported that investor group Plains Angels has invested $750,000 over the last eight months. This is great news for Iowa startup companies. Venture capital in Iowa has lagged and groups like Plains Angels are definitely trying to change that.

There is a $300 application fee to present before the Plains Angels' group. In some blog posts and other social media outlets, I've seen the fee criticized by some who expressed concern that it was just a fee collection group. I considered that assertion somewhat naive on the part of some seeking funding, but the recent news should alleviate some initial fears that the group is actually making investments in companies rather than just collecting fees. The significant investment made over the last eight months in three Iowa companies is very promising for the Iowa startup scene.

If you're interested in learning more about the process for Plains Angels or becoming an investor, be sure to visit the Plains Angels Website.

Iowa Business Court Judges Selected

rush.nigut@brickgentrylaw.com (Rush Nigut) — Fri, 08 Mar 2013 08:43:55 -0600

In January I wrote about the new Iowa Business Specialty Court Pilot Project. This week the Iowa Supreme Court announced that three judges have been selected to hear cases for the business court. The judges include:

Judge Michael Huppert of the 5th Judicial District, which includes Dallas, Polk and Warren counties;
Judge Annette Scieszinski of the 8th Judicial District;
Judge John Telleen of the 7th Judicial District.

I have had the opportunity to appear before or work with all three of these judges. It's an excellent list of judges to get this pilot project off the ground. Again, I'd like to see the threshold amount come down from $200,000 so that more business cases can be involved but it will be interesting to see how the new business court is received by lawyers and the public. Eligible cases can begin to be transferred May 1, 2013.

Trend Moving Toward Greater Protection for Franchisees?

rush.nigut@brickgentrylaw.com (Rush Nigut) — Tue, 05 Mar 2013 08:25:31 -0600

With the recent passage of a new state law in Ohio and a new bill offering greater protection for franchisees in California, it will be interesting to see whether this growing trend of more pro-franchisee laws continues.

Interestingly enough it is Iowa that is often cited as a pro-franchisee state because of its franchise act. However, the growing economic market in Des Moines and throughout Iowa has not kept franchisors from establishing businesses in the state over the recent years. In my view, the opportunities for growth in Iowa far outweigh any negativity franchisors may have toward the Iowa franchise act.

But added protections for franchisees isn't necessarily a bad thing. Most franchise agreements are very one-sided in their terms and often have significant legal protections for the franchisors. You generally have a sophisticated business entity on one side (the franchisors) and less sophisticated people (the franchisees) on the other side. Most franchisees are small business people just looking to make a good living and may be investing their life savings into a franchise. Offering greater protections to franchisees should not hurt good franchise operators that deal fairly with franchisees. It will set them apart in the long run. Moreover, franchisees may feel more comfortable to go into franchise businesses.

So it will be interesting to see if the trend continues toward tougher franchise laws and the impact these laws will have on the industry.

5 People You Need To Meet When Starting Your Business

rush.nigut@brickgentrylaw.com (Rush Nigut) — Tue, 26 Feb 2013 21:11:20 -0600

There are 5 people every entrepreneur should meet when starting a business:

Lawyer;
Accountant;
Banker;
Insurance Agent; and
Marketing professional.

How do hire a lawyer that's right for you? See my article on my new site, Iowa Business Law Services.

As we are now in the heart of tax season, many business owners are looking for an accountant to complete their taxes. That's the wrong time to do it. Business owners need to establish a relationship with an accountant from the very beginning. It's important to receive tax advice on which business entity is right for your tax situation. Hiring a good accountant for your business is absolutely essential. A terrific accounting blog is the Tax Update Blog.

Lots of business owners also wait to establish a relationship with a banker until they need a loan. Again, that's the wrong time to start. Instead of opening an account at any old bank, get some recommendations and talk with business bankers before opening an account. Tell the business banker about your business and your plans. Try to stay in contact with the banker periodically if just to remind them you are still there. You never know when you might need a line of credit or loan. Establishing a relationship with a banker in the beginning can pay big dividends.

Find an insurance agent that specializes in insuring businesses. There may be hidden land mines out there that you can insure. I recently communicated with a business insurance agent regarding a contract matter for a client. The business insurance agent had important input that will protect my client moving forward. I seriously doubt an insurance agent dealing primarily with car and home loans would have known about the specific issues we were dealing with.

And if no one knows about you it will be tough to succeed! Consult with a marketing professional that is knowledgeable in your industry. A tremendous blog on marketing is Drew's Marketing Minute.

Iowa Business Law Services: Rush on Business Companion Web Site

rush.nigut@brickgentrylaw.com (Rush Nigut) — Thu, 21 Feb 2013 06:00:00 -0600

I am very happy to announce my new companion Web site to go along with this blog at www.iowabusinesslawservices.com. The site will feature information on my legal practice areas, a simple way to submit information for formation of a new corporation or LLC and also a video resources section with tips on business and franchise law. We'll also feature many other business and franchise law resources as we develop out the site.

A new offering with the new site rollout is that I am immediately implementing a Subscription Services Plan to make legal services more affordable for the new or early stage company. Check it out for details.

I also set up a new Facebook page for the blog be sure to 'Like' the page for easy access to updates on business and franchise law.

Thanks so much for following Rush on Business. And look for some other exciting offerings from me very soon relating to franchise law.

Lesson # 5 From Hard Luck Franchisees: Restrictions on the Products and Services Sold

rush.nigut@brickgentrylaw.com (Rush Nigut) — Mon, 18 Feb 2013 11:36:17 -0600

The Classic Battle

A group of franchisees file a lawsuit contending the franchisor forces them to buy products and/or services at inflated prices while setting retail prices so low the franchisees cannot profit. The lawsuit also alleges that the franchisor omits or misrepresents key facts about its business operations when selling the franchise.

The franchisor, of course, denies the allegations and intends to vigorously defend the lawsuit.

The Issue

Many franchise agreements contain restrictions on the products and suppliers the franchisee may use. While this may seem reasonable in the beginning, (after all, you're buying a proven system, right?) many franchisees discover later they can get cheaper products and find better suppliers than they can using the franchisor's system. The franchisees begin to question why they are paying for higher priced products along with paying royalties which eat into profits even more. When this happens franchisees tend to get upset and file lawsuits like the one described above.

If the franchisee agreement you are considering contains restrictions on products and suppliers be sure to consider those provisions very carefully. Be prepared to ask the tough questions of the franchisor when it comes to products and suppliers. Also, don't take for granted just because you are going with a franchise that you are getting the benefit of the franchisor's "bargaining power."

Above all, make sure to talk with as many current franchisees as possible regarding the products and services of the franchise and conduct your due diligence.

BIZ to Host Event with Dwolla COO on the High Growth Start-Up

rush.nigut@brickgentrylaw.com (Rush Nigut) — Fri, 15 Feb 2013 14:04:01 -0600

The BIZ is host to a great event this coming week featuring Dwolla COO Charise Flynn as she takes questions on life behind the scenes at the high growth start-up. I've had the opportunity to serve on a speakers' panel with Charise and I find her personal journey and insights fascinating. Charise is a fellow Simpson College graduate so you know she's got to be good.

The event is Wednesday, February 20th at 11:30 a.m. at the Greater Des Moines Partnership offices. The admission fee is $15.00 which includes lunch.

Lesson # 4 From Hard Luck Franchisees: Buying a Franchise in a Saturated Market or Industry

rush.nigut@brickgentrylaw.com (Rush Nigut) — Thu, 14 Feb 2013 09:04:24 -0600

I've seen it many times. A certain market or industry becomes "hot" and all the sudden franchises start popping up all over the place. For example, a few years ago the 24/7 fitness market took off. In the Des Moines, Iowa area there were all kinds of fitness franchises that entered the 24/7 fitness market. Unfortunately many of them went out of business and only a few major players remain.

This happens in other industries. Right now the self-serve premium yogurt market seems to be really taking off. You add the toppings yourself and then weigh the cup just prior to paying. Looks to be a "hot" concept. But in the end how many of these franchises will be around in 10 years? Don't know but it's safe to say there will probably be some winners and losers in that market.

It's not a surprise that a significant percentage of franchises will fail. After all, the majority of businesses fail within the first 5 years. With the typical franchise agreement lasting 10 years, it's important to choose a concept that will have staying power rather than just the latest "hot" concept.

Buying a franchise is a major investment. Success is not guaranteed. Choose wisely.

For interesting reading take a look at this article on the Top Franchise Trends for 2013.

Lesson # 3 From Hard Luck Franchisees: Franchisor Reservation of Rights to Sell or Transfer Business

rush.nigut@brickgentrylaw.com (Rush Nigut) — Tue, 12 Feb 2013 08:18:10 -0600

This is Lesson #3 in a five-part series on the top reasons I've seen franchisees fail.

Tucked away in nearly every franchise agreement is a provision that very few franchisees consider when they are purchasing a franchise business. The provision I am referencing gives a franchisor the right to sell or transfer its business to another person or entity. Now I am not saying that a franchisor shouldn't have that right. Of course a franchisor would like to reserve the right to sell its business as a succession plan or outright sale for profit. But unfortunately I've seen many franchise relationships change dramatically after the sale.

On many occasions I've found that the new franchise owners lack the spirit and care for the franchisee that the original owners may have possessed. The new franchise owners may not have the same goals or aspirations as the original owners. They may even change business models, pricing or marketing which could have a significant impact on your business. As a result, many franchise operations fail after the franchise has been sold.

If you are going into franchising, have careful and detailed talks with the franchisor about their goals. Find out if the franchisor is in talks with anyone to sell the franchise business or whether that is an ultimate goal of the franchisor. The franchisor may not always be candid with you but perhaps they will be and you will have gained valuable information in the process. If sale talks are imminent, you may be better off waiting to see what the new owner has in store for the franchise business. But no matter what be aware that the franchise business could be sold and consider carefully whether you are buying a "system" or whether you are getting caught up in the persona of the franchise owner. Because if you are buying the owner rather than the system, you may be in for a rude awakening if the franchise business is sold.

In the end, you are not likely to eliminate the risk that the franchisor could sell. An astute franchisor would not negotiate that provision away in a franchisor agreement. But consider that possibility from the start and whether the franchising "system" is right for you.

Business Partnerships Need Communication

rush.nigut@brickgentrylaw.com (Rush Nigut) — Thu, 07 Feb 2013 08:46:18 -0600

Mike Colwell of THE BIZ posted a presentation I have on Partnering for his Raising Capital series. One of the biggest things a partnership needs is communication. Like any good marriage, communication is the key. Business partners that communicate effectively are much more likely to be successful. Also, proper documentation is a key. Without documentation, many partnerships are doomed to fall into litigation if problems arise.

View my presentation on Partnering here.

VIew all of presentations on Raising Capital here.

Lesson #2 From Hard Luck Franchisees: Buying a Franchise with No Brand Recognition

rush.nigut@brickgentrylaw.com (Rush Nigut) — Mon, 28 Jan 2013 06:00:00 -0600

The franchising model is available in almost every industry. (Even law firms apparently). Reports have indicated there's nearly 1 million established franchised businesses in the U.S. Among those franchises are many unknown (or relatively unknown) franchises. In my opinion it is critical to buy franchises with brand recognition.

Does that take out many new franchises from consideration? Perhaps even the future Subway or McDonald's? Why yes, it does. Let someone else be the guinea pig. (This shouldn't be too hard in Iowa because most franchises become popular somewhere else before coming here). My rule of thumb - ask 10 of your friends if they have heard of your franchise opportunity. If they haven't, perhaps you should reconsider the opportunity. The upfront costs of franchising are often considerable higher than starting your own business. If the brand isn't recognizable, can you really justify the higher costs associated with buying a franchise or perhaps you are better off starting your own independent business?

I've seen several franchisees buy unknown franchises. In many instances it hasn't worked out. They spent a lot of money but really didn't get much in return. Part of the appeal of franchising is to license someone else's trademark. An easily identifiable trademark gives a franchisee a potential leg up. It doesn't guarantee success, but all things being equal, look to franchises with brand recognition. Sinking money into an unknown franchise is generally a poor investment in my experience.

For a good discussion on the pros and cons of buying well-known franchises read Does Buying a Big-Name Franchise Ensure Success?