10 tips for investing in a franchise

With more than 3,000 options in the world of franchising, these tips are great for you starting the process. Remember, knowledge is power!

1. Start by looking at your own business skills. Are you great at sales and marketing, or better at operations? Are you a manager of people, or prefer having no employees?
2. Are you comfortable using someone else's systems and procedures? Remember that franchising is a license that you purchase to have the right to use the system. Don't invest in a franchise, if you won't use the system. Start an independent business instead.
3. Does your family support your decision? Starting any business is a family decision. Your family must that your business will affect time available for time, and you will need their support.
4. Complete your net worth statement. How? Subtract all your liabilities from your assets; that's your net worth. Your lender requires a down payment; don't forget your own living expenses during your startup period. Set aside enough for 6 to twelve months, while your business ramps up.
5. Talk with franchisees. When you find some interesting franchises, visit and talk with as many franchise owners you can in those systems. Are you like them? Are they glad they chose their particular franchise system? Would they do it again?
6. Take time during your research. Be thorough, don't rush, and talk to both happy and unhappy franchise owners. Discuss what you're hearing with the franchise company's representative. See how they react to your questions.
7. Read through the Uniform Franchise Offering Circular (UFOC). The franchise company will send you this required legal document. Take note and write your questions down as you review it, so you can ask the franchise company representative.
8. When you have decided on one opportunity, visit the franchise company's headquarters. Meet the executive and support teams in person: they are your potential business partners. And remember that a good franchise company is also checking you out. They want the right people for their franchise.
9. After you return from your visit, check your notes to see if you have covered everything. If so, have an attorney familiar with franchise law look over the franchise documents. The attorney should point out things you may have missed, and explain both party's legal obligations. Also have a CPA help you decide on a business structure for your company, if you decide to move forward, and go over financial information.
10. Make your final decision: gut check time. You've finished collecting data. You've met franchise owners. You've visited company headquarters. Now: does this opportunity "feel" right? If so, move forward. If it does not feel right, don't do it. There will be other opportunities. Really.