Once you’ve generated a list of companies you are interested in working with, you need to investigate each one further. There are over 3,000 franchise opportunities available today. This research will give you a fuller picture of the franchisor to help you make an informed decision.
- How long has the franchisor been in business?
- How many current franchisees are there?
- What is the failure rate of the franchisees?
- Are there any pending or past lawsuits and what have they been for?
- Does the franchisor have a reputation for quality products or services?
- What is the franchisor’s financial health? Get the Dun & Bradstreet rating, including credit rating, profitability and reputation.
- What are the earnings claims and profit projections? On what are they based?
- Are the projections based on franchisor or franchisee-run units?
- How long have the units used for projections been in business?
- What is the background of the principals/management?
- What is their business experience?
- Have they personally had any bankruptcies?
- Have they personally had any recent litigation?
These won’t be the only questions you should ask, but they should get you thinking. Pay attention to questions that arise as you do your research and keep track of your answers. Also, keep a list of questions you want to ask the franchisor. This part of the investigation may seem tedious, but we promise – it’s invaluable.
Next time we’ll look at reading the UFOC/FDD. If you are thinking about a franchise opportunity, talk to your local FranNet consultant and receive your free Personal Franchise Assessment to get matched to the right franchise for your business personality.