Franchise Buying Guide

Information Please

Q&A
Presented by Guidant Financial
Guidant Financial specializes in helping entrepreneurs purchase new franchises using their retirement funds.

So you think you've found the right franchise for you? Ask these 24 questions. If the answers aren't satisfactory, chances are there's not much opportunity there.

The Franchise Organization

  • Does the franchisor have a good track record?
  • Do the principals of the franchise have industry expertise?
  • How strong is the franchisor's financial condition?
  • How thoroughly does the franchisor screen franchisees?
  • How profitable is the franchisor and its franchisees?

The Product Or Service

  • Is there demand for the product or service?
  • Are industry sales strong?
  • How does it compare to competing products or services?
  • Is the product or service competitively priced?
  • What is the potential for industry growth?

The Market Area

  • Are exclusive territories offered?
  • Does the territory you're considering have sales potential?
  • Is the competition strong in this area?
  • How successful are franchises near this area?

The Contract

  • Are the fees and royalties reasonable?
  • How attractive are the renewal, termination and transfer conditions?
  • If the franchisor requires you to purchase proprietary inventory, how useful is it?
  • If the franchisor requires you to meet annual sales quotas, are they reasonable?

Franchisor Support

  • Does the franchisor help with site selection, lease negotiations and store layout?
  • Does the franchisor provide ongoing training?
  • Does the franchisor provide financing?
  • Does the franchisor sponsor an advertising fund to which franchisees contribute?
  • How strong are the franchisor's promotional programs?
  • Does the franchisor have favorable national contracts for goods and services?

Reprinted from Start Your Own Business: The Only Start-Up Book You'll Ever Need, by Rieva Lesonsky and the staff of Entrepreneur magazine (Entrepreneur Media Inc.). To order a copy, visit your bookstore or www.entrepreneurmag.com.

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