How to Decide Whether to Buy a Franchise

If you are hungry for some spice in your career but don't want to start from scratch, try purchasing a franchise. Whether it's in food, service or retail, you can often have it your way.

Instructions

Difficulty: Moderately challenging

Things You’ll Need:

• Business Books
• Accounting Services
• Business Loans
• Legal Services

Choosing the Right Franchise

1. Determine what it is you seek in a franchising opportunity. Prioritize your concerns.
2. Consider whether you wish to buy a product or service franchise.
3. Consider the location of the franchise and the possibility for relocation.
4. Discuss the amount of money you have to invest and consider adopting one or more partners.
5. Calculate the return on investment that you expect and need.
6. Determine whether you will need low-cost or third-party financing.

Investigating a Franchise System

7. Attend franchise expositions. Read extensively about the franchise system in business magazines and books.
8. Request an information packet from potential franchisers.
9. Submit financial information and an application.
10. Meet with the appropriate people in the franchiser corporate headquarters.
11. Speak with other franchisees currently in the system.

Tips & Warnings

• Visit franchise and business opportunity shows to consider many alternatives.
• It can sometimes be difficult to find a franchise available in your geographic area; be as flexible as possible regarding relocation.
• When evaluating franchise opportunities, look for systems where franchisees are encouraged to voice their opinions and suggest improvements.
• If the franchisees are not paying royalties, it is usually because they are not making enough money or because they are dissatisfied with the support they receive from the franchiser.
• Review the financial history and statements of the franchise system to understand how money is being spent and assess the system's strength.