Why You Should Contact Existing Franchises Before Starting Your Own

Start calling all existing franchisees to find out more about the one you want to start a business with. Equally important, pay them a visit in person.

Information in Uniform Franchise Offering Circular

Another important piece of information that are uniform franchise offering circlet contains is a list of existing franchisees. This includes the franchisees who have been terminated or who have ended their relationship with the franchisor in the past. You will have access to the address and phone numbers of these businesses. If a list of terminated franchisees is long but it could be an indication that entrepreneurs find problems working with the franchisor. You can use the contact information for former franchisees to get more information as to why the agreement was terminated on whether the business had some problem with the franchisor.

Call & Interview Existing Franchise Business Owners

You can also decide to interview some of the existing franchisees in person. This is a good idea and quite an important step in your research. Do not go by the selected few names that the franchisor provides, but make your own sample list.

Visit Existing Franchises in Your Area

You can visit the current franchisees and talk to the franchise owners to find out what kind of business they are experiencing and what is your experience with the franchisor. You’ll get an idea of what a day today business can be like and whether you want to have a similar lifestyle as for as your business is concerned. In order to get all related information from the existing franchise, it is a list of questions that will help you get your research of the ground.

Questions to ask existing franchise businesses

  1. Did the franchisor offer any training?
  2. Was the training helpful in getting the business started?
  3. Is the franchisor communicative and responsive to your business requirements?
  4. Have there been problems with the franchisor that you did not anticipate?
  5. Has your experience showed that the information provided in the uniform franchise offering circular was accurate and realistic, is the income you generate in tandem with the expectation stated in the uniform franchise offering circular?
  6. Is the business seasonal?
  7. Are there expansion possibilities and opportunities for additional franchise in the system?
  8. Would you make the same decision to choose this particular franchise all over again based on your current experience and information?

Ensure that you discuss the details of the relationship of the business owner with the franchisor. Do things get easily done such as the purchasing process?

Talk to as many franchisees as you can to get a broader perspective and an accurate picture of the franchisor. Do not hesitate to ask sensitive questions even though some franchisees may not be very willing to answer them. One of the questions that often gets ignored is whether the franchisee had any conflicts with the franchisor. Conflicts are normal and natural in the course of a business between two different parties were involved. The important factor is how the problems were resolved and how often to the conflicts arise. The conflicts should be not serious enough to interfere with the running of the business and profit making.

Visiting existing franchise and talking to franchise owners will give you an idea of what businesses like. You will get to see firsthand how the business is run, what a typical business days like. Simply thinking in monetary terms might not be a very good idea because you probably also have a certain lifestyle in mind when you think of starting your own business. Certain franchise could have long hours involved as well as constant attention to the business. Investigating different franchise in different fields can help you choose one that fits your lifestyle better.

Spend a Week Working in Existing Franchise

Some experts also advise that you should spend at least one week working in an existing franchise. Some franchises may facilitate this kind of an arrangement. This is the best way to evaluate what your life is going to be after you sign the contract. Working in a franchise and spending time there gives you a good idea to business because all franchise for a particular company hubbub of the same business model and have to deal with the same parent company.

If by the end of your research you have shortlisted more than one franchise companies, you just have to decide which one you are more comfortable with. That is another reason why visiting existing franchise in person is so important in the selection process of the right size business with herself.

How to Choose the Right Franchise Business

Once you have decided that a franchise is the right path for you how to choose the right franchise?

Choose the Right Field of Interest

First of all you start with looking at various industries that interest you. You also look at the growth potential for the various different industries. By the method of elimination you narrow down your choices to a few industries that you are most interested in. Then you analyze your geographical area and see which franchise and businesses are already running in your area and which business has the potential for growth. If there is no existing business in the line that you have chosen, it could mean additional exposure and less competition. However, you need to make sure that the customer base for your product or business exists. This is accomplished by doing a market research, a topic that we have spoken about at length earlier. Once you have narrowed down the list of franchise business that you could start, contact all the available franchise for information. Any reputable franchise company would be happy to send you information no extra cost. Do not rely completely on the promotional material but to your own investigation of the company as well. You can do a search online and look up the various magazines, newspapers and articles that you can find about the company. Reading about the company will give you an idea whether there are favorable reviews for existing businesses as well as whether the company is well-managed and growing.

Contact the consumer or franchise regulators in a state to see if there have been any complaints or problems with the company. Check to see if the company or its principals have been involved in a lawsuit, bankruptcy or violations of federal laws and regulations. You can check with the Federal Trade Commission whether there has been any involvement of fraud or violation. If you do find petitions or lawsuits against the company, check with the records of the court and request a copy of the petition or judgment.

Check with State Franchise Authority and D&B

14 states in the United States of America regulates the sale of franchisee. The states are California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, North Dakota, New York, Rhode Island, South Dakota, Virginia, Washington and Wisconsin you can. You can contact the state franchise authority and check the records of the company if they have complied with the registration requirements. You will also need to find out what laws and regulations apply to you if you want to purchase a franchise. If the company is registered with D&B., you can request a D&B report which will give you details about the company’s financial standing, payment policy and other information. The easiest and perhaps the first way you can check out any business is by checking online or with the local office of the Better Business Bureau. If the company still sounds good, your investigation is just beginning. In order to get more details about the franchise, contact the franchise and ask for a copy of its uniform franchise offering circular. This is a disclosure statement that must be provided to all prospective franchisees within 10 business days before any agreement is signed or money changes hands, which are historians. If a company says that it is a franchise but does not provide you with a universe u franchise offering circular, you should contact the Federal Trade Commission and take your business elsewhere.

Uniform Franchise Offering Circular

The uniform franchise offering circular is an extremely important document as it has extensive written description of the company along with its financial details such as investment amount and fee required to become a franchisee. It also contains any litigation and bankruptcy history of the franchise and its officers, the trademark, the products that you on a required purchase, the advertising program and the contractual obligations of both the parties which is you and the franchisor. This document will also tell you how much working capital is required, equipment needed as well as the royalties that you will need to pay the franchisor. It also contains a sample copy of the franchise agreement that you will have to sign to buy the franchise you will also be given the franchisors audited financial statements for the past three years as a part of the uniform franchise offering circular.

In recent times the uniform franchise offering circular has been simplified and less full of legal jargon making it more readable for the average person. Before you make any final decisions you should also make your attorney and accountant read the circular as well.

How To Buy An Existing Franchise Business

buying a franchise

Buying a franchise lessens the risk of starting a business from scratch. Many executives choose starting out through a franchise as it gives them the groundwork of becoming an entrepreneur sometime in the future with their own business and also because they feel comfortable with a lot of aspects of a business such as taking care of managerial work, making calls, managing orders, employees etc.

However, you can further lessen the risk of a franchise business by buying an already existing franchise. Just like buying an existing business, an existing franchise will already have a customer base and a management system in place with ongoing revenues.

While any franchise is given support by the parent company and the management system as well as many policies that govern the running of the business are dictated by the parent company, buying an existing franchisee still has advantages. You can check the local classified ads or visit the business of resale network www.businessresale.net which has many thousands of business that are available for resale.

When you have found an existing franchisee that is for sale, the steps for evaluating the business are the same as we have mentioned about choosing the right franchise. However, you are likely to get a lot more information from an existing franchise that is for sale. Because this business owner wants to sell, he will be more cooperative in giving you details of the business and hard facts.

However, just as it was the case with buying an existing business, the cost of buying an existing franchise is probably going to be higher than taking a new franchise from the parent company. This purchase price can be 2 to 4 times that what you would pay for new franchise from the same company

Because you are going to pay so much more money it is even more important to have the audited financials financial statements and have them reviewed by a continent.

All of the procedures of investigating the business and its legal standing with your lawyers such as previous litigations and judgments if any, bankruptcies, complaints and violations with the Federal Trade Commission all need to be looked into. The assistance of an attorney is imminent and important.

In some cases you might discover a franchise that is not doing well. It is your job to evaluate what the reasons for the failure of the business days. The current owner could be doing something wrong such as not implementing effective marketing and advertising strategies or isn’t putting enough effort in the system correctly.

It is crucial to analyze this factor with the help of your accountant and your attorney. You may even take the help of management expert. You should be able to determine that the problem is something that you can correct and bring the pro-business to be profitable.

There are franchises for sale because the current owner is not making enough money or is running at a loss, you may be able to get the existing franchise at the same cost as from a quarry even lower than what you would have paid for a new franchise from the existing company.

Analyzing franchise running at a loss before you buy it is important because it’ll probably take some time until you can implement your new methods and strategies in order to turn the business from a lossmaking business to a profit generating one.

However, in the meanwhile you will have overheads to pay for the business. So while you purchase a franchise yet a certain cost, you will have to pump money into it for a certain duration of time before the franchise starts to generate an integrated.

One of the most important questions to consider and the first basic one that you should ask is why is the business for sale? It is possible that even though the franchise is thriving and generating profit, the parent company may not be doing so well.

In certain situations when the franchise owner knows that the parent company is going to face financial problems in the near future they might try to unload their business before the company.. Also analyze the systems, accessibility that you would get from the existing franchise owner when you buy it. Do not settle for anything less than what you’d get if you were to buy a new franchise.


  • Buying existing franchise to cut down risk.
  • Better assessment of risk and potential earnings.
  • More expensive.
  • Ask franchiser for existing business for resale.
  • Visit business resale network.
  • Have numbers audited by a CPA.
  • List of questions to ask the same as when buying a new franchise.
  • Buying a franchise in trouble, make sure the problem is something that you can fix.
  • The parent company for the franchise should not be in trouble.

How To Prepare For A Franchise Business Opportunity Trade Show

Franchise trade show

Attending franchise opportunity tradeshows

Attending a franchise and business opportunity tradeshow can be helpful in exploring the various franchise investment opportunities. Usually when you go to a trade show of, you will find dozens and even hundreds of businesses on the shore. This can be exciting as well as confusing. So in order for your trip to be fruitful, you need to prepare carefully.

Before you go to the show, consider what kind of business investment you are looking at. Consider all aspects such as part-time or full-time, what kind of business you want to set up which are better suited to your hobbies, passions and, skills and expertise.

Calculate your financial resources.

You should know how much you can afford to invest in a franchise. Evaluate all your resources such as what you have, but you can borrow from family and friends and from lending institutions and how much you would need to sustain yourself and your family while you initially setting up a business. What are your financial goals for the business? Get all this information or give organized so that you are able to narrow down the franchise offers at the trade show.

Go with a serious approach.

Dress conservatively, and go with the serious frame of mind to the trade show. Showing the representatives that you are serious contender will probably result in you getting more attention and information. Trade shows can get swamped by people from all arenas and various different interests. You should try and stand out as a prospective and serious buyer.

When you reach the show try to do the following.

Study the floor plan of the exhibition. Trade shows can be immensely large where hundreds of businesses are showcasing themselves. Studying the map will help you locate the ones of your interest and where they are located so you can cut down on wasting time in searching for them. Stop by these boots of interest.

Use your time well

Pay attention to the businesses that you are interested in and do not waste time with the franchise offers that are either out of your range or do not meet your requirements. When you stop at the stalls of your interest, you should ask them a list of questions such as

  • What is the total investment required or should not
  • What is the franchisee’s typical day like?
  • What arrangements are made for product supply?
  • Is financing available from the franchisor?
  • Ask for a copy of the company’s Universal Franchise Offering Circular. Not all franchises will give you this information at the trade show which is acceptable. But if you’re serious about the opportunity, insist on having a copy as soon as possible.
  • Collect all information such as business cards and brochures that they are handing out.

Once you have come back home file away the information that you collect systematically. Go over all the information that you collected about various businesses and start making calls to the ones that seem interesting.


  • Make a list of what your interest and expectations are. Part time full time etc.
  • How much are you willing to spend to purchase the franchise license.
  • Be serious. Dress well. Go with a business approach.
  • Make it a professional trip, not personal.
  • Look at the floor plan. Note the franchise of interest.
  • Stop by and ask for details. Total investment? Product supply? Typical business day?
  • Take a round of the place. Ask for UFOC.
  • Don’t waste time with franchise that do not fit your criterion i.e.too expensive or not in area of expertise and interest.
  • Collect business information, business cards, brochures, business plans.
  • Organize the information and go over it systematically.
  • Start making calls to the businesses of interest.

Benfits Of Buying A Franchise Business

buying a franchise business

Buying a franchise is usually a good option for those who consider starting a business from scratch too scary and buying an existing business either too costly or just not the right option. What is the franchise? A franchise is a setup where you pay another business an initial fee and then ongoing royalties in order to use a trademark, business product and the right to use the franchisor’s system of doing business and sell its products or services.

The advantages of buying a franchise is that you get to buy a proven business system. You get it to run a business with an established system of marketing techniques, selling strategies and a reputation and brand name to go along. If it is a well-known franchise, the customers are familiar with the name and feel confident spending money at a business knowing that they will get the same product that they are used to.

For example, McDonald’s is the most popular franchise system in the world probably. Customers know that they will get exactly the same food in any McDonald’s franchises all over the world. So while you inherit the business system from another business, you get to make the sales and keep the profit apart from paying a portion of it to the franchisor as ongoing royalty.

For this royalty and business set up you get a proven system of operation, training which can help a new entrepreneur avoid simple mistakes during startup. If the franchise has a good track record you can be sure that you would inherit a system where the daily routine operations have been perfected through much trial and error.

The successful franchisors have usually conducted a lot of marketing research in order to develop the product. Many of the popular franchises or big corporations make an immense amount of money from their franchise business run by entrepreneurs all over the country and all over the world.

Some of the common aspects of starting a business like conducting a market research and making a business plan is taking care of you by the parent company. The product is already there and the marketing and selling strategies is helped a lot by the fact that you are running a business on well-known brand name.

You will also enjoy the advantage that comes with having strength in numbers. Because franchisors are large corporations they purchase the raw materials required for the products usually involve. It means that the cost of running a business and producing the product of the service would be much less for you that if you want to do similar work on your own.

Being associated with a known brand name also give you an edge in dealing with suppliers, lending institutions, negotiating for locations etc. Some suppliers do not like to deal with new businesses and personal businesses where as many lending institutions and banks may not want to lend money to a first-time business startup.

Is Starting A Franchise Business The Right Decision

In certain circumstances many of business entrepreneurs can find the business model of a franchisee too restrictive. When you take a franchise of a certain business, you usually have to follow the rules, regulations and the business model that the mother/patent company stands for. When you buy a franchise you inherit a complete system and adhere to the way of running a business. 

The strictness of the implementation of the rules will depend upon the nature of the business, the company itself and your relationship with the franchise business. A very often quoted saying about franchising is that it puts you in business for yourself but not by yourself. This means that you get continued support from the parent company. This support is also in the form of monitoring that you are following their rules and regulations. 

Many business owners might not want to have this kind of interference in the business and would like to be completely independent. If you are the person who has a new creative idea for a business and would like to have the gratification of starting something wrong right from scratch, then a franchise business may be the option for a.

Normally people who quit their executive jobs find a franchise is a good option of starting a business on their own. These executives are used to doing a job that involves delegating work, managing logistics, processing paperwork etc. 

Since a franchise takes away many of the hassles of setting up a business from scratch such as creating a new customer base, generating sales, developing marketing strategies, a franchise owner can spend most of his time in managing the business. In fact starting out with the franchise could be easier way to transition yourself into a full-blown entrepreneurship sometime in the future.