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.

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