So you’re looking for a franchise in Maryland. Congrats! I have good news for you, and I have bad news for you.
The good news is that study after study shows that franchises have a much higher probability of success than an independent business starting from scratch. The bad news is that there are over 4,000 franchises to choose from. How can you choose a franchise in Maryland that is perfect for you?
Here are 4 tips for how to choose a franchise in Maryland
1. Winnow down your search
It’s unrealistic you’ll be able to research 4,000 franchises in Maryland. Your first step is to determine what you’re really looking for. Do you want a brick and mortar franchise? Do you want a home-based franchise? Do you want to be an owner-operator or do you want a franchise with more passive income?
The more important question that needs to be answered is “Which franchise opportunities in Maryland best match your skills, interests, resources and passion?”
That’s where working with a franchise placement specialist can help. It doesn’t cost you anything. Like a realtor gets paid by the seller, a franchise placement specialist gets paid by the franchisor when they make a perfect match.
Knowing what you want, what your goals are, what your resources are, and then matching that to franchises in Maryland that meet that criteria will get you started on the right track.
2. Read the Franchise Disclosure Document (FDD)
Even when you think you’ve found the perfect franchise, you can just write a check and hang your open sign. Franchises are not sold, they’re awarded. And as part of that process, all franchisors and sellers of business opportunities in Maryland are required to give you an offering circular or "disclosure statement" at least 10 business days before you sign a contract or pay any money.
The disclosure statement for a franchise in Maryland has 23 sections and must contain specific information including:
- the history and background experience of the franchisor/seller;
- the identity of corporate officers; the company's and the officers' litigation history;
- the amount of your initial investment; the parties' obligations to each other;
- copies of all contracts or purchase agreements; and copies of the franchisor's/seller's financial statements.
Item 19 is where you’ll want to focus your time and attention on. This section of the FDD discloses information that helps you determine “how much can I make in this business?” Every franchise will disclose financial information in a different way, so take the time to review it and if necessary ask your accountant to help you review it.
Do not sign a contract or pay any money until you have had the opportunity to review the Franchise Disclosure Document (FDD). Do not skip this step! Where many aspiring franchise owners stumble is they think the franchise disclosure document is a contract. It’s not. It’s just a document that discloses information on the franchise so you can review it and make an informed decision. When you’re ready to move forward, you will sign a franchise agreement. Also, remember that oral statements and promises that are not in the disclosure statement, legally, mean nothing.
3. Do your homework
Avoid high-pressure sales tactics, and don't purchase anything in a hurry. Legitimate franchisor companies will expect you to investigate their offering and comparison shop with other franchises.
Take the time to speak with other franchisees. Understand the good and the not so good. What makes the top performers so successful? Why are some franchisees not performing as well? Learn from the best so that you can emulate what they’re doing. Know that those who are not successful are usually because they’re not following the franchise system.
Most franchises and business opportunities involve a significant investment. Take the time and spend the money to seek competent legal advice before investing your money. We highly recommend that you have a lawyer review the contracts or agreements before you give the franchisor any money. Don’t know a franchise attorney? Reach out! We’re happy to connect you to a few attorneys we highly recommend that specialize in franchise law. You are better off spending money now to learn that there are no problems than spending thousands later if problems arise.
4. Know your state franchise regulations
Every state has different laws and regulations for franchising.
Maryland is considered a registration state. It is against the law for anyone to offer or sell you a franchise in Maryland that is not registered with the Securities Division. It is also not legal to sell a franchise in Maryland by fraudulent means. We suggest that you Inquire about the franchisor's registration in Maryland, and then call the Division to check. We have an interesting personal story on this one, so contact us if you would like to learn more.
It is against the law to sell a business opportunity (different from a franchise) without first filing the appropriate documents with the Securities Division and is also unlawful to sell a business opportunity by fraudulent means in Maryland. Just as above with a franchise in Maryland, Inquire about whether the business opportunity (bizop) seller has filed with the Division.
These 4 tips will help you make an informed decision as you research franchises in Maryland.
Need additional help? Contact us! We’re here to help you get to the next level.
 | Author BioI’m Stacey Riska aka “Small Business Stacey”, your franchise placement specialist. I help aspiring business owners find the PERFECT franchise so they can get to the next level in life and business. |
