How to avoid the wrong franchise

Posted on October 05, 2010 by Franchise Gator Admin

With so many choices for franchisees, it can be difficult to know which franchises best suit them. One of the biggest concerns that franchisees have is how reliable the larger company is.

One of the best ways to find out about a franchise before making a substantial monetary investment is by doing proper research on government websites and databases. When a franchisee has a problem with the larger organization, he or she normally files a complaint with either the Federal Trade Commission or the Better Business Bureau. It is also within a prospective franchise buyer's rights to get a list of names of other people who have owned and operated a franchise.

"There is no substitute for checking the track record of a franchisor or business opportunity seller by personally talking to at least 100 prior purchasers," according to the FTC's website. "That’s why the Franchise Rule requires companies to give consumers a list of the names, addresses and telephone numbers of at least 100 prior purchasers who are geographically closest to you. Interview these prior purchasers about their experiences."

By understanding what others have gone through, franchisees can more easily determine what is right for them. If a company has been the subject of numerous complaints, it may be best to steer clear.