4 Ways to Tell A Franchise is a Lousy Opportunity
Buying a franchise has many benefits – the biggest being job independence with a business that has a proven formula and a name for itself. However, some opportunities out there are too good to be true. Before you take the plunge and purchase a Phoenix franchise, here are four signs that a franchise could be a bad opportunity.
1. Too many upfront fees and pressure
A professional franchisor will allow you to take your time in making your decision. He or she may even assist you in your decision, answering any questions you may have or setting up a meeting with another franchisee so you may talk to someone with experience in the same business. If you feel pressured early on, it’s a good sign the franchisor is only after your money. Also, if they ask for an upfront fee before anything is signed, walk away.
2. You are only getting vague answers
Buying a business is a huge financial and emotional decision. If you are getting only vague answers to your important questions, it may be good idea to look elsewhere. However, there are times when a franchisor could have a good reason for declining to give information. For example, franchisors need to be wary of certain information getting out to their competitors. Use your judgment in this case. If you know your questions are a bit too sensitive, then the franchisor may have just cause to be vague. On the other hand, if the franchisor is avoiding giving you hard answers for key questions, then that is a sign of danger.
3. You are not allowed to speak to existing franchisees
Talking to a current franchisee is a good way to get information that will help you with your decision. However, if the franchisor restricts you from doing so there may be something wrong. The franchisor may not be fair, or the business may not be doing as well as portrayed. Not being able to speak to current franchisees to find out about the current market or the success of the business is normally a red flag. And make sure the franchisees you speak to are unbiased franchisees – not part owners or associates of the franchisor.
4. There is a lot negative press surrounding the franchise
The Internet is a treasure trove of information when it comes to researching a business. Do a search on the franchise you are considering to find good and bad information. Look for any scandals or lawsuits. Also, check forums and social networks to see what consumers are saying about the business. If the majority of the “buzz” is negative, you may have a hard time keeping customers.
To be a great business opportunity, a franchise must come with a great franchise team, a proven business formula and a good marketing plan. Unfortunately, there are some franchises that aren’t as good. If you happen to find yourself in a legal bind with a franchise, or you need legal advice while evaluating a franchise, you should obtain the advice of an experienced franchise attorney.
Written By Brad Denton
40 N Central Ave #1400
Phoenix, AZ 85004
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