Aritcle Source: Lance Winslow
Many Colorado franchise buyers want to get in on the ground floor of the hottest new franchise that is available. They see that the company is selling the franchises like hotcakes and they want to get in before the Colorado franchises are sold in their area where they live. But you must be very careful about buying franchises that are part of a Fad and not part of a long-term trend. Fads come and go, and if you sign a 10-year franchise agreement, and take out a ten-year lease, and all of a sudden no one is interested in buying that product anymore or having those services, you will be stuck holding the bag.
Not only that, but you won't be able to transfer your Colorado franchise opportunity or sell it to anyone else because no one will be interested in buying it. Yet, you will probably be stuck with paying the minimum royalties to your franchisor even if you are not making any money. Not to mention the fact that the landlord will expect your lease check for rental of the building each month regardless of the fact that you are not turning a profit.
Now this is not to say that a hot new Denver franchise may not actually be a good deal. Many are, and all large Colorado franchise chains that are quite successful were once one of the hot new franchises of their year. Of course, there were probably 3500 franchisors that are no longer with this, that were once one of hot new franchises also. In reality the failure rate of franchisors is 5 to 1 over the first five years. And if you are one of the franchisees of one of those systems, you will have spent quite a bit of money and capital getting your business up and running only to have the entire bottom drop out. Please consider all this.
Lance Winslow is a retired franchisor - Lance Winslow's Bio. Lance Winslow is formerly the CEO of WashGuys family of franchises for instance one of Lance Winslow's favorite companies on the team; http://www.windowwashguys.com/links.shtml.
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