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Will There Be Potholes on the Road to Franchise Freedom? Yes. There Will Be 7, to Be Exact. Here are the seven points in the franchise due-diligence process that are prone to stopping someone from moving ahead with a franchise -- but you will get past them.

By Tom Scarda

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.


I have talked with hundreds of people from all different walks of life and all financial states. Every last one of them, including myself when I bought my first franchise, say that they had to face their fears before buying a franchise.

In my opinion, the decision about buying a franchise is rarely a decision between franchise "A" and franchise "B." The final choice is usually the choice between unhappiness and uncertainty. Unfortunately, most choose unhappiness and go back to the comfort of their zone. To make a big life decision, one must always push beyond the beliefs they have for themselves.

Related: Top Franchises You Can Launch for Less Than $50,000

I have noticed that there are seven points in the franchise due-diligence process that are prone to stopping someone from moving ahead with a franchise -- junctures that will induce fear and anxiety. I like to call these points the seven potholes on the road to franchise freedom.

If you know where the seven potholes are before you begin your franchise search, the more likely you are to fulfill your goal of being a franchise owner and not get stopped by fear of the unknown. Here's what you need to know.

1. The initial search

Typically, most people get on the Internet and start searching for franchises or perhaps, go to the Entrepreneur Magazine's Top 500 list. At first-glance the companies fall into two categories: Too expensive or just doesn't sound appealing.

My advice is to not judge a book by its cover or a franchise by its name. You may have no idea how great they are at helping people achieve success unless you have a conversation with them. Also, you may be surprised to know that there are franchise finance companies that can help anyone with a good credit score. Keep an open mind!

2. The Franchise Disclosure Document

The Federal Trade Commission, the arm of the United States government that oversees franchising, mandates that every company have a Franchise Disclosure Document (FDD) that must be issued to their prospective buyers. Many people get anxiety when they receive the FDD. It is thick and ominous. If you get a hard copy of the FDD, it's sometimes the size of a telephone book -- remember those?

No need to worry, the FDD is your friend. There is a ton of information in it that makes the franchise company transparent to the prospective buyer. At the outset, you don't have to read the whole thing. Just skim to get the pertinent data that you need to start. If you're not buying, no need to waste time. If you do intend to invest in the company, you must read every page and understand every sentence. The good news is that the Federal Trade Commission mandates that the FDD's be in plain English, making it easier to understand.

3. Third-party advice

If you need help with understanding the FDD and other legalities of buying a franchise, it's a great idea to talk with a franchise attorney. A traditional business attorney is not good enough. Franchising is different than a mom-and-pop enterprise in many ways. Also, going in, you need to know what you want the attorney to address.

Remember, the attorney is not there to validate the franchise and give you their opinions. The attorney will explain what you're signing, so you understand what you're getting into. In addition, franchise business advice from family and friends, even if they own a business, is not the best insight into franchising and the specific one you're considering. The very best advice and insight comes from existing owners of the concept you're interested in. That information is priceless.

When I first got excited about franchising and controlling my own destiny, I started to tell my friends and family about what I was contemplating. Everyone thought I was crazy, because I had what was considered a great government job. That kind of feedback can scare someone and stop him or her in his or her tracks. Listen to opinions of others, but don't take the advice of uniformed, nonprofessionals to heart. Gather information, and make your own informed decisions.

Related: Franchise Your Business in 7 Steps

4. Validation calls

During the due-diligence process, when you get a few phone calls and webinars deep with a franchise company, they will ask you to call their franchise owners to validate what they have been telling you regarding the support from the franchisor. This task is the most important thing to do. You will learn everything about the company you're considering -- some good things, some not so good.

You need to know everything before signing anything or spending any money. I have a list of 40 questions to ask existing franchise owners to make your interactions effective and efficient. Download the questions for free at The Franchise Academy.

5. Liquidating funds

When it comes time to apply for loans or move capital around so you can invest in your franchise, most people get uptight. If you are not serious or don't know why you're buying a franchise, this is when you'll end up bailing out and choose unhappiness and go back to the bad boss, the hell commute or whatever it was in the first place that made you start looking for a change.

6. Meet the team

When you are feeling really good about a company, and they are warming to the idea of awarding you a franchise license, they will invite you to their corporate headquarters. This is like getting married and going to meet your future in-laws. Nerves run high, and some folks just can't take the pressure and end up quitting on their dreams at this point. You must get past the fear -- and make this visit!

7. The 11th Hour

So now you have all the information you need to make a decision, and you have decided to move ahead with the franchise company. The next step is to sign your franchise agreement and write a check for an amount of money that is equal to a down payment for a house, a lot of times. When I was sitting at my kitchen table doing this, I didn't know if I was going to vomit or faint.

In the end, it's a sort of right of passage for someone to become a franchise owner. If you have any doubts about controlling your own destiny through franchise ownership, all of those doubts will come to the surface at this point -- if not before this point. Every little "what if" becomes magnified. Every issue screams fear. This is normal and to be expected. Close your eyes and leap! Change is the only way to grow and have what you want in life.

Related: The One Element Your Franchise Can't Afford to Ignore

Knowledge is power. I have seen that when someone is prepared and knows that anxiety is part of the process of making any change in life, he or she can get past it and is more able to deal with self-imposed head games that come up because of the stress of making a decision and get past it. Decision anxiety is an important emotional state to understand if changing your life and becoming a franchise owner is important to you.

If you do find the perfect franchise for you, I hope you choose uncertainty and unlimited possibility.

Tom Scarda

Author, Speaker, Franchise Expert

Tom Scarda consulted with FranChoice in 2000 and purchased a Maui Wowi Fresh Hawaiian Blends franchise and quickly expanded his operation to three locations. In 2003, Tom took on the role of director of regional support for the greater New York area. He sold his Maui franchise in 2004 and now shares his knowledge and expertise of franchising with people like you who are in search of making a lifestyle change and taking back control of their lives. Tom is Amazon bestselling author of Franchise Savvy and can be reached at 866-545-6191 or

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