If you’re considering buying a franchise, the best thing you can do is research, research, research.
Here’s advice on how to do that, from Jason W. Power, a principal at franchise law firm Shelton & Power.
1. Attend franchise events
Large franchise expos take place all over the country, and these can obviously be a great place to find out about new and exciting franchise opportunities. However, while it’s one-stop shopping in terms of basic information and networking, keep in mind there are lots of ‘shiny ads’ at such events, Power says.
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Most booths are manned by sales people, and they’re ready to hard-sell you on the franchise they represent, he says.
2. Talk to franchisors and franchisees
As an initial step, head to a franchise’s website and request more information, or call the company directly.
“Ask the stupid questions,” Power recommends. Carefully review all materials you get, including the disclosure document. As you get further into the process, the franchisor may invite you to attend a ‘Discovery Day’ or ‘Join the Team’ event at its headquarters, but see if you can pay a more informal visit early on, Power suggests.
For the real scoop, talk to existing and former franchisees. “Call as many as possible,” not just the ones a franchisor might recommend that you call, he adds.
Ask franchisees about their experiences, including the support they’ve received. For a hands-on look, “see if you can shadow them for the day,” he says.
3. Consult with consumer agencies
You can see if there are consumer complaints against a particular franchisor by doing a search on websites such as hellopeter.com.
It’s important to research whether individual franchisees near your potential location have a record of complaints. After all, if a franchisee “down the street has a bad rating, it will reflect on you,” Power says.
4. Do a web search
The Internet may sometimes lead you down wormholes, but there are a number of sites for basic franchise information.
Entrepreneur’s own ‘Franchise Zone’ section is great place to start. Here you can find out about all the latest franchise opportunities. As mentioned, another great place to start is a franchise’s own website.
A website’s ‘look and feel’ can offer a surprising amount of info with regards to how seriously a franchise takes its marketing activities.
An unimpressive website littered with spelling errors does not bode well. Also, pay close attention to how quickly the franchisor gets back to you when requesting more information, and how thoroughly your questions are answered.
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It could offer useful insight into how the franchisor/franchisee relationship will play out.