Money Talks

The most common question asked by prospective franchisees is, 'How much money can I make with this franchise?'
This story appears in the May 2008 issue of Startups. Subscribe »
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It can be particularly frustrating to discover that receiving and verifying financial performance information is quite often the most difficult part of researching any franchise opportunity.

Franchise companies are restricted in terms of what information they can offer a prospective franchisee concerning how much money can be made in the business. They aren't required to provide any such information, but if they wish to do so, it must be in writing in Item 19 of their Franchise Disclosure Document.

Other than whatever they choose to disclose in Item 19, franchisors simply say that a prospective franchisee must contact the existing franchisees in the system to determine the answer to this fundamental question. As you can readily imagine, many existing franchisees are reluctant to discuss what they consider to be very personal and confidential information with a stranger, making this problematic at best.

Nevertheless, this is not an area where you can afford to compromise your need for information. Don't purchase a franchise until you're sure you have a clear and accurate picture of what the average financial performance is at the unit level. If you can't reach this level of clarity, the only truly safe decision is to choose a different franchise.

Edition: October 2016

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