Franchise Research Online

In today’s world of instant information many of us naturally turn to the internet as a quick and easy source of information on almost any topic.  So it certainly makes sense to consider it as a source of information when evaluating a franchise business opportunity. However, if we take everything we see on the internet as a fact, we can be misled.

I was recently talking to a client who had Googled a franchise of interest, only to find an alarming report claiming it was a scam.  His enthusiasm was immediately gone and he rejected the business without further thought or research.  A closer look revealed that what he saw was an anonymous report from a former disgruntled employee of a franchisee.  

This company has been franchising for over 10 years, they have more than a 100 franchisees and each franchise has several employees.  Would we really be surprised that there is one unhappy former employee in the mix? 

Web pages play a trick on our psyche just like seeing something in the newspaper or a magazine.  Information on the printed page has greater credibility whether deserved or not.

Here are some practical tips for using the internet when researching a franchise:

1. Be aware of the source of data. Anyone can create a website and post data that looks credible but where is the information coming from? Are there referenced sources? Some sites are well documented and edited, but others have no more validity than gossip around the company water cooler.
2. Put greater trust in complaint sites that notify the target of the complaint. For example, the Better Business Bureau only publishes information on complaints when the business has had chance to respond. You get both sides of the story.
3. Stay focused on what is important in your decision about purchasing the franchise. A Google search of McDonald’s results in numerous references to nutritional concerns about the product. Yet I doubt that any McDonald’s franchisees suffered from the delusion they were buying a health food store. A lot of data on the web is oriented toward being a customer of the business. Your concern is, “Do I want to own that business?”
4. Consider possible biases of the website or source. Be equally cautious about positive information about a franchise. There are websites that offer rankings of franchises with lists like “Fastest Growing Franchises” or maybe “Top 50 home based Franchises.” Most of these sites make their income selling advertising to franchise companies. Are you sure they are completely objective developing their lists?
5. Be aware that searching the web is indirect research. Direct information is easily available to you when you are researching a franchise. The franchisor must provide you with a detailed disclosure document that includes the contact information for all their franchisees – successful and unsuccessful. Use information from the web in conjunction with the other important tools available to you to do franchise research. Ask franchise owners about any concerns you have about the business including what you see on the web. Only the current franchises know the benefits and challenges of that particular franchise. And isn’t that really what you want to know?

Thom Crimans of FranNet Mid-America submitted this story.