A Closer Look

Is that new franchise or biz op a ground-floor opportunity--or a flash in the pan?

Today's booming economy offers you more choices than ever when it comes to investing in a franchise or business opportunity program. New franchise and business opportunity companies are springing up all the time. Many are based on recent computer innovations; others are simply clever new ideas whose creators hope to hit it big with a popular investment concept.

Selecting and investing in any business package has its challenges, but when checking out a new franchise or business opportunity, it's especially important to go slow. New programs tend to offer fresh, exciting opportunities. By definition, you're getting in on the ground floor when you buy into a new program. The concepts are often based on current market sizzle: They look hip and impress investors with cutting-edge technology or the latest trends. They may target a valuable emerging market or appeal to a market segment that has great potential.

These features can really get your entrepreneurial juices flowing, and the urge to jump into the deal may be almost too much to resist. But one nagging fact should make you stop and think: A new company has no track record of success. The concept is unproven, and there may still be some expensive bugs in the system. It pays to go slow. Take a deep breath--and take the following steps to thoroughly investigate the new investment concept.

Andrew A. Caffey (Acaffey@compuserve.com) is a practicing attorney in the Washington, DC, area and an internationally recognized specialist in franchise and business opportunity law.

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This article was originally published in the November 1998 print edition of Entrepreneur with the headline: A Closer Look.

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