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Step 1
Do research. Any time you want to invest your time and resources into a venture you must do some research. Do not rely on the franchise to tell you everything.
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Step 2
Know the full costs. Some franchises fail because the franchisee did not know how much money it would really cost. Some franchises will require you to be able to get a $250,000 loan, but you may have to share in advertising, profits and other fees.
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Step 3
Know your area. Most failed franchises did so because of location issues. Studies show that defined areas are more successful. Normally the headquarters are hundreds of miles away. You live in the area, so drive it and see what is already there in terms of competition and others who already own that franchise in your are. Can your market handle more than one of that particular franchise?
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Step 4
Know your market. Years ago one particular franchise had a habit of overselling, and their franchisees were practically building within blocks of each other. Needless to say, many went out of business because they were essentially splitting the customers. The franchise found themselves as a target in class-action suit. In as much as the franchise was to blame, so was the franchisee.
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Step 5
Go with what you know. Too many fail because they try to start businesses in areas that they don't have any experience in. Eating in a restaurant is not the same as running one. You need to know the type of franchise you are getting into, and it has to be able to provide you with the income you are looking for.
