The second level of comparison, market impact, requires a slightly deeper investigation of the franchise opportunity. The market impact evaluation looks at such qualities as recognizability of the trademark, sophistication and maturity of the franchisor, and thoroughness of the initial training program. It also considers the earnings potential of the business, the franchisor's involvement and expertise in opening new units, the professionalism of the company's advertising and promotional materials, the size and organization of the system's advertising fund, and your evaluation of the company's multiple-unit development potential.
You'll find some of the market impact information in the UFOC, particularly in Item 1, the description of the competition the investor will face; Item 11, training and advertising; Item 13, registration of the trademark; and Item 19, earnings information.
How much money will you make with this business? This key question is one of the most difficult to answer. Franchisors aren't required to provide earnings data, but if they do, it must be disclosed and detailed in the UFOC. Fewer than one-third of franchises provide earnings claims, so you may have to draw the best conclusions you can from talking to current franchisees, then make your own projections by working with an accountant.
Gather other market impact information from existing franchise owners or your own market research. Visit as many franchisees as you can and find out their opinions. Does the franchisor provide effective marketing? Are franchisees' opinions considered in advertising development? For many franchisees, marketing and advertising programs are the most valuable aspect of being a franchisee.