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Look Before You Leap – Or Buy a Franchise
Once you have convinced yourself that a buying a franchise is in your future, you will want to do a great deal of investigating before signing on the dotted line and writing a big, fat check.  There are a number of things to look for when purchasing a franchise – what industry to select, what type of business within that industry to run (whether managing a retail store, running a mobile operation, or working from home) and, finally, which of the dozens of brands to represent.  Not every opportunity is the right one, and what works for you may not be the best choice for another franchise buyer.

Before Buying a Franchise for Sale
It is vital that you first consider your financial circumstances before making additional inquiries regarding the purchase of a franchise.  What is the state of your credit?  How much cash do you have to put down?  What sort of collateral can you draw upon in order to borrow the rest of what you might need?  Having a clear picture of your financial resources will help steer you in the right direction.  After all, it makes no sense to consider buying a million-dollar franchise if your circumstances only support a purchase half that large.

Doing Your Due Diligence
The term “due diligence” originated during the Great Depression, when the federal government put into place new regulations to oversee the stock market.  Since then it has gained a broader meaning, indicating to any investor the wisdom of learning all you can about a specific opportunity before putting your money into it.  Once you have taken the necessary steps and decided which franchises are on your short list of options, it is time to investigate them thoroughly.  Every franchisor is required to provide certain documents to prospective buyers.  Naturally you will want to review them in great detail, and it rarely hurts to call upon professional assistance in the regard – a franchise attorney, a banker, or even a CPA.  But there are things to investigate beyond what may be included in the various franchise disclosure documents.  It’s a good time to play Sherlock Holmes and dig out the magnifying glass, old bean!

Ask Tons of Questions
While this is far from an exhaustive list, these are the sorts of questions you’ll want to have answered before deciding that a particular franchise is right for you.

• How do you help franchisees select a business site?
• What sort of initial training do you offer, and is there ongoing training as well?
• How does the home office support you during your grand opening period?
• In what manner does the corporation answer your questions, and how quickly do they respond?
• Is the parent company solvent, or are there financial difficulties?
• Has the home office been the subject of any lawsuits and, if so, of what nature and to what result?

Hit the Road
It is hardly sufficient to sit by passively and wait for information to come to you.  Two of the most important visits you will make during this investigative process are a stop at the home office and at least one or two stints at an existing franchise location.  Some franchisors even encourage potential buyers to work for a time in the business, which provides some perspective from the ground up.  It also allows you to broach sensitive subjects with individual franchisees they may hesitate to answer from afar.  Getting to know corporate officers face to face, and allowing them to see you, can assist the buyer in determining whether you share certain business and moral values with the company at large.

Engage Expert Advice
Although this factor has been mentioned earlier, the hiring of an attorney specifically skilled in franchise law is a wise investment.  The franchise agreement binds you to the parent company, and not only financially.  This document explains exactly what you may and may not do as a franchisee.  More importantly, it lays out the methods by which disputes between the parties are settled.  Since hardly any franchise commitment will cost its buyer less than $50,000 all told, and usually far more than that, it makes sense to spend a grand or so to make sure you understand the contract you will be signing.

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