Properly Evaluate a Franchise Before Purchasing

Determining which franchise to purchase needs to be done carefully. When time is taken to properly evaluate it, the business purchased will how to evaluate a franchise opportunityprovide financial and other rewards long into the future. Should a proper evaluation not be conducted, it can result in learning too late about overlooked things that provide a negative impact.


It’s important to know the history of the company providing the business. This organization will be responsible for providing essential support. Learn about the culture of the company. Knowing about the backgrounds and experience of the company’s officers is essential. An attitude about how business is conducted is evident. Look for an organization that has stability. The company will provide a Franchise Disclosure Document (FDD). This should provide complete details of the company for research purposes. This document is not provided unless the company has determined a person or organization is a serious candidate and qualified to purchase the business.

Earning Estimates

Carefully evaluate all financial aspects of the company offering the business opportunity. It should be able to provide information about how much a franchisee can expect to earn. The FTC recommends asking for earnings based on similar sized companies. Remember your own experience and work ethic will impact your earnings. Not to mention location can make a difference, rely on the franchisor to assist you in location selection.


One of the big attractions for purchasing a franchise is their name recognition and brand development. Even a young franchise brings the benefit of a proven marketing system. This translates into marketing clout. It’s important to learn how their marketing program works. It’s possible a franchisee will have to pay into a marketing fund. This allows the business owner to benefit from a proven system as well as purchasing clout.

Right Business Opportunity

It is important when determining which franchisor to approach. This is one of the most important services we provide to our clients. Not every businesses opportunity works with every person. We work directly with you to assist in choosing the right match. Should a person not like working with food, then a fast food business would not be a good fit. If someone enjoys packing and shipping, there are businesses available for them. To be a success will require a huge commitment. It’s important to commit to something that provides a pleasant daily experience.


Important to your success is the type and amount of training that will be provided by the franchisor. Is it provided to the franchisee and then a certain amount is charged for each employee to have the same training? Is this a cost covered in the fees paid to the company? It’s also important to know what will be provided during the training and length of the training program.


Obtain references from others who have purchased the same type of business from the franchisor. Meeting with them at the business may be the best way to obtain an insider’s view of how things actually work. Having questions prepared in advance is a big help. It may also be good to talk to other businesses in the area to see how it fits in with the community.


The territory where the business could be located should be written in the FDD. Many companies are very careful where they offer locations. It may all depend on what is trending in a particular proposed territory. Areas that are experiencing growth are the most attractive. When suggesting a territory, it may help to visit the local City Hall and have a conversation with someone involved with zoning and planning. The goal will be to create a winning situation for all sides.


Owning such a business will require the franchisor to be paid royalties. The percentage of royalties should be covered in the FDD. With many of these types of business, a franchisee will pay royalties on a sliding scaled based on the generated revenue. In most cases, the more a company earns, the lower the amount they have to pay in royalties. There could also be minimum royalty payment requirements written into the FDD.


Working directly with the franchisor team and developing a great relationship can be the key to your success. Make certain you feel comfortable with those that will be leading your franchise development.

Doing your homework is important when choosing the business model that will allow you to reach your business ownership dreams. If you need assistance we are more than happy to help.

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