- Ask the franchisor’s representative specific questions about the business. This means that you should create a list of the questions that are important to you and take your time when contacting the franchisor to ensure that your questions are answered thoroughly.
- Thoroughly read the Franchise Disclosure Document (The FDD is the information that the franchisor is legally obligated to provide prior to the signing of a franchise agreement. The structure is dictated by the Federal Trade Commission to ensure uniformity.)
- Interview current franchisees (They are listed in the FDD) regarding their experience with the franchisor.
- Interview former franchisees (They are listed in the FDD) regarding their experience with the franchisor.
- Visit as many current franchise locations as possible and conduct an on-site assessment to see if the day to day operations are a fit for your lifestyle.
- Read articles in business publications about the franchise, the franchisor and its franchisees.
- If the franchise is publicly traded, review the annual report.
- Check to see if the franchise has been reviewed by a credible third party, such as Entrepreneur Magazine’s Franchise 500, FranSurvey, Franchise Business Review or Inc Magazine’s Inc 500, and compare the results.
You want to make an informed business decision about the business that you are intending to purchase. Your research will help you calculate your opportunity cost: the risk you take with your investment capital, your time, and your potential to derive an income from another job or business. Not only that, you want to secure the value of your assets for the time in the future when you may wish to sell the business.
About Joe Barbat
As a leader in the wireless retail industry, Joe Barbat founded Wireless Toyz in 1995 and grew the organization to a multi-location national franchise. Now Joe Barbat focuses on providing quality information and advice for franchise candidates that are interested in creating a better life through owning a franchise. Questions, thoughts, and comments about your franchise search experience are fielded by visiting the Ask Joe Barbat section of the website.