Franchising has become a very attractive way for people interested in starting
their own businesses to get into the game. Franchises offer a unique opportunity
that saves new business owners the time, energy and money they would need
to build their own concept from scratch.
Although franchises can still be a great opportunity for success, it’s
important to look under the hood before you buy. Here’s some important
warning signs with the help of
Half the franchisees aren’t hitting estimate earnings. If the franchisor’s Franchise Disclosure Document outlines potential
revenue, confirm by examining the current revenues of existing franchises.
Franchisor blames the franchisees. Don’t let a franchisor explain away the performance of its middle-
and bottom-earning franchise owners by saying the franchisees don’t
understand the system. If this is the case, you could also say they can’t
The model is in a perpetual state of flux. One of the most important factors of a franchise’s success is its
proven business model. If a franchisor is always changing its concept,
the model simply may not work.
Compliance is more important than results. What is the relationship like between the franchisor and its franchisees?
Does the franchise company encourage a collaborative environment in which
they invite recommendations and creative ideas? If not, you should look
Keeping it in the family. A great franchise company needs highly skilled and seasoned management.
Do they possess the experience needed to handle a variety of different
situations? Too often, franchise companies choose family or close friends
for positions, ignoring the best people for the jobs.
We hope to have shed some light on what to look out for when buying a franchise.
Come check out our
video and see how bluefrog Plumbing + Drain™ stays away from the warning signs.