Assessing a Potential Opportunity
The following section outlines many things you need to consider in order ensure you are choosing the right Potential Opportunity venture for you. Before signing any contract with the seller, you need to be sure that everything is covered. These are some strategies to help you protect yourself.
Legal representation is essential.
It is important that your attorney attends negotiations with the licensor/seller. Your attorney should at the minimum review the contract to purchase the opportunity and advise you whether it should be signed in its current condition. So that you can understand what you’re signing, your attorney should explain every aspect of the contract.
Your accountant should examine the financial statements for the licensor-seller. He or she should also be capable of assessing the financial strength and determining whether the business can be viable as a financial investment.
Do your own independent survey to see if other owners have purchased business opportunities from the parent company.
Are they satisfied? Is the company doing everything they promised? Does the company offer a great working environment? Are its distributors supported? Do they send advertising materials? What do they consider the strengths of this opportunity? What would they do if they had to go over it again? Would they advise you to buy a unit if it was necessary?
Contact your competitors.
This will show the industry status. Competitors will quickly tell you what the company’s strengths are. It will also give you an opportunity to compare the business opportunity in terms price and other aspects.
Examine the credit history of the seller. You can ask your accountant for help.
You must ensure that you understand all terms and conditions.
Take the time to read the disclosure statement and the purchase agreement.
Examine the credibility and reliability of the parent company.
Credibility doesn’t necessarily require that the parent company be huge in money. You can use your common sense to assess whether a company appears credible. Because you deal directly with the president of the company, small businesses can be a great option for buyers. They will be training and working with your. This is a significant advantage over someone who might just be working as a worker at the bottom of the ladder. Are they really interested in you? Are they sincere? Have they done thorough background checks? Are they concerned about the kind of buyer who will carry their banner? This is vital. If they only care about taking your money, then you are in serious trouble.
What the Disclosure statement says
A disclosure statement describes everything you need to know about the opportunity and the seller. It contains information such as the financial strength of the promoter, how many units are available, and what amount you’ll be expected to pay. There are no hidden fees. The disclosure statement’s purpose is to protect both the licensee and the licensor as well as to remove unscrupulous licensers.
You should have a detailed history of your parent company. It should detail the history of the parent company, the identity and business experience, as well as whether the company or any of its officials has ever been involved with litigation.
Obligations to the licensee
Any financing arrangements must be disclosed. If you’re going to have to purchase from any supplier, this should be disclosed upfront. The disclosure statement should also include information about what the parent company will provide in terms training, equipment, ongoing service, and a training manual.
Promises of fulfillment by the licensor
This should indicate whether you’re gaining an exclusive area or territory. You must identify all trademarks, service mark, trade marks, logo types, commercial symbol, and any patents or copyrights you are going to be allowed to use as a licencee.
Obligation of licensee
This is how you will get involved in the actual operation and management of the business opportunity. This must be mentioned if the business is operated by an absentee owner. If the licensor states that you are required to operate the business personally, this should be indicated. There are no restrictions on the products or services that licensees may offer. You can renew, terminate, repurchase or modify your license. It must also list current licensees with their addresses, so you can contact them.