Sometimes savvy investors obtain rapid success by becoming franchisees. Taking this step allows them to utilize a proven business model. Most franchisors require an initial investment, which may amount to hundreds, thousands, tens of thousands, or even millions of dollars. Many also require franchisees to pay recurring fees and/or a percentage of their annual revenues and to commit to specific contractual obligations.

The Importance of Careful Research

Yet while successful franchises sometimes offer a pathway to success, a poor franchise decision may prove costly indeed for a franchisee. For this reason, most experts recommend always conducting careful research and analysis before entering into any franchise agreement. By law, franchisors must provide their prospective franchisees with important documentation and disclosures.

Smart franchisees also typically take the opportunity to conduct “secondary” market research. They need to verify information about the business, the industry, and the marketplace. Effort expended upon careful, accurate research potentially translates into dollars and cents later.

Ask Important Questions

For instance, if you’ve contemplated purchasing a cell phone repair franchise recently (or any other type of franchise), it usually makes sense to consider asking numerous questions before signing on the dotted line. Author Mark Siebert recently completed a book describing many aspects of franchise ownership. He strongly urges prospective franchisees to meet in person with a franchise owner and ask a number of essential, detailed questions. Entrepreneur Magazine published a portion of his advice about this topic. His queries cover a broad range of subjects, including the marketplace, the competition, and the franchise’s business model.

Conducting diligent research allows prospective franchisees to evaluate industries and lucrative business opportunities more effectively. This vital step has helped some business owners avoid making costly mistakes in the past. Investors who conduct comprehensive research into available franchise opportunities within specific industries collect data which may help them make smarter long term business decisions. They enjoy an opportunity to use research constructively to help inform their plans.

A Take Home Message

One take home message from this process relates to the vital importance of asking the right questions before entering into any business commitment. Should an investor blindly accept information concerning a franchise opportunity without verifying the details? No! Performing careful research helps ensure everyone makes better informed decisions based upon accurate, verified information.

 

 

 

Helpful Resources

  1. https://www.entrepreneur.com/article/25072
  2. https://www.entrepreneur.com/article/323423