Franchise Buying Guide

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Investigating Your Options
Presented by Guidant Financial
Guidant Financial specializes in helping entrepreneurs purchase new franchises using their retirement funds.

Once you've decided a franchise is the right route for you, how do you choose the right franchise? With so many franchise systems to choose from, the options can be dizzying. Start by investigating various industries that interest you to find those with growth potential. Narrow the choices down to a few industries you are most interested in, then analyze your geographic area to see if there is a market for that type of business. If so, contact all the franchise companies in those fields and ask them for information. Any reputable company will be happy to send you information at no cost.

Of course, don't rely solely on these promotional materials to make your decision. You also need to do your own detective work. Start by visiting your library or going online to look up all the magazine and newspaper articles you can find about the company you're considering. Is the company depicted favorably? Does it seem to be well managed and growing?

Check with the consumer or franchise regulators in your state to see if there are any serious problems with the company you're considering. If the company or its principles have been involved in lawsuits or bankruptcies, try to determine the nature of the lawsuits: Did they involve fraud or violations of FTC regulatory laws? To find out, call the court that handled the case and request a copy of the petition or judgment.

If you live in one of the 15 states that regulate the sale of franchises, contact the state franchise authority, which can tell you if the company has complied with the state registration requirements. If the company is registered with Dun & Bradstreet, request a D&B report, which will give you details on the company's financial standing, payment promptness and other information. And of course, it never hurts to check with your local office of the Better Business Bureau for complaints against the company.

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