How do you investigate a franchise?
HOW DO YOU INVESTIGATE A FRANCHISE?
Like starting any business, buying a franchise involves a risk. Studies show that successful franchisees:
- conduct their own marketing research
- use their own financial and legal advisors
- develop thorough marketing and business plans
- have prior work experience in the industry
Prospective franchisees must devote a vast amount of time researching the franchises available and evaluating the strength of the franchisors.
FIND OUT WHAT FRANCHISES ARE AVAILABLE (refer to pages 51 to 55 in Franchising for Dummies)
- The Franchise Opportunities Guide
- The Executives' Guide to Franchise Opportunities
- The Franchise Annual
- Franchise Handbook
- How Much Can I Make?
Read Articles and Ads in Business Publications:
- Entrepreneur: www.entrepreneurmag.com
- Franchise Times: www.franchisetimes.com
- Franchising World: www.franchise.org
- The Wall Street Journal: www.wsj.com
- The New York Times: www.nytimes.com
Attend Trade Shows and Expositions:
- IFE (International Franchise Expo) is sponsored by the International Franchise Association (IFA: 202-628-8000 or www.franchise.org) and is the world's largest gathering of franchise companies.
- The U.S. Small Business Administration and Small Business Development Centers (SBA: www.sba.gov)
Research the Internet:
EVALUATE THE STRENGTH OF THE FRANCHISOR
Investigate the Franchisor’s History:
Obtain Professional Advice Concerning the Franchisor’s FDD and Franchise Agreement:
Seek the advice of an attorney and accountant who specialize in franchises.
Talk with Existing Franchisees:
- level of training
- quality of products or service
- level and promptness of support
- operations and quality of the operations manuals
- financial performance history/claims
- any problems or difficulties with the franchisor
Visit with Existing Franchisees
- Visit/talk with franchisees who have left the system and find out why they left.
- Visit the franchisor's headquarters:
- meet the support team
- review the operations manuals and see if you can sit in on a training class.
Work in an Existing franchise:
Get to know the system, manuals, training program, support, earning potential, etc.
For more information on the franchising business model, click here