Many franchisors use the Internet to publish press releases
containing information about unit performance, but you can find
news articles about the company on the Web as well. If the company
is public, review its SEC filings. The reports are available from
most stockbrokers or can usually be obtained from the
franchisor's Web site.
It's also important to understand how your franchisor's
competition is performing. Robert Bond publishes a comprehensive
compendium of earnings claims made by franchisors titled How Much Can I Make? (Source Book
Publications). For more information, go to www.worldfranchising.com.
Investing in any franchise is an important decision, and putting
together enough accurate information takes some time and effort.
You should never rely on one source to make your decision,
especially when so much additional information is available to
you.
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If you are not a sophisticated investor, seek the assistance of
a franchise attorney, a consultant or an accountant. They can help
you dig through the data and put together a meaningful projection
for your future business. It's usually better to avoid asking
for assistance from a franchise broker, as they work for the
franchisor and therefore have an interest in your purchasing the
franchise. Stick to independent advisors who have your interests in
mind.
Michael H. Seid is managing director of Michael H. Seid &
Associates, a West Hartford, Connecticut- and Troy,
Michigan-based management consulting firm specializing in the
franchise industry. Seid recently co-wrote Franchising for Dummies(IDG Books) with
Wendy's founder Dave Thomas.
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