Background work to be done by franchise purchasers
Franchise purchasers should try to get the maximum possible information on the prospective franchisor's business credentials, its litigation background and the financial dimensions of the proposed franchise investment.
Also, compile data like contact information of existing franchisees. If you have a comprehensive list of franchisee contacts with you, it becomes easier for you to get in touch with the existing franchisees. You can speak to them over the phone, and if required, meet them. You should visit as many franchisees as possible for getting a cross section of opinions and evaluations on the franchise program that you are considering. Ask the current franchisees for their honest views on the franchise program.
Try to know more about following aspects:
The value of the support and training they have received from the franchisor The day-to-day work that is involved in the business The profitability of their business operations The scale of their business operations
Franchise purchasers should conduct extensive research about the investment by making an approximate accounting projection and also a break even analysis with help of a good accountant. You should seek assistance of an attorney for reviewing the franchise agreement. This will help you to know more about aspects, such as the rights granted to you, and the obligations imposed on you. Try to find out whether any portion of the contract to be signed is detrimental to your business interests. If it is not acceptable to you, try to negotiate the same with the franchisor.