Buying a franchise business is something that should always be approached with a great deal of caution and research. You should make sure that you comb over every detail of the franchise you wish to purchase and make sure a competent franchise attorney looks over ever document the franchisor provides to you. By law, franchisors must provide the franchisee with the proper documentation and numbers that will help you make your decision. A franchise attorney must be skilled in the area of franchise law and have a verified track record of legal franchise experience.
It is important to conduct your own independent research on the franchise you wish to join. You can perform a simple Internet search using your preferred search engine to look for what the public is saying about the company. How many times have certain keywords related to the franchise been recently queried? Does there seem to be a lot of interest in this particular product or service? Are there any areas where this product or service is lacking and has a high demand? It is also wise to subscribe to news services that can send you links to updated articles on franchising and industry trends.
While conducting your research, be sure to look for any past lawsuits or major problems with the franchisor. If there are any areas of weakness or past lawsuits brought on by the franchisee, you may not want to proceed any further with the company. By law, the history of lawsuits and legal troubles must be given to you by the franchisor.
Another way to get an accurate representation of the industry you are researching is by ‘mystery shopping’ its franchise stores. Ask questions of the franchise owners and see how they run their business. They can give you a real description of how the franchisor operates and what problems, if any, they are having. Often times, when a company knows you are interested in becoming a franchisee, they will provide you with testimonials that speak highly of their franchise. By conducting your own research and visiting the brick-and-mortar buildings unannounced, you’ll get a much more accurate representation of what it means to be a franchisee for that company.
Don’t just talk to the franchise owners, but speak to the customers as well. Find out what they enjoy the most about the company and what things they would like to see the franchise offer. Have they had any problems with the franchise? How was the issue resolved? What can you do as a franchise owner to be sure these problems don’t arise under your watch?
After doing the research and crunching the numbers, you’ll have a pretty good idea whether this particular industry is right for you and if the franchisor would be easy to work with. Don’t dive into a franchise opportunity without first doing your due-diligence to insure this venture will be profitable and fun.