As a general rule, the government requires that franchise owners provide potential franchisees with specific information so that you can make an informed decision - this is known as the Federal Trade Commission's Franchise and Business Opportunity Rule.

Key to this rule is the responsibility of franchisors to provide potential franchisees with a 'Detailed Disclosure Document' during the pre-sale stage. This is an essential piece of information that can provide valuable insight into your chosen franchise.

The detailed disclosure is required to contain the following:

• Contact information for at least 10 previous purchasers in your area
• An audited financial statement
• Executive profile information
• A true view of the business start up and maintenance costs
• An outline of respective franchisee and franchisor responsibilities

The document must be provided at least 10 business days before you pay any money or legally commit yourself to a purchase.  A franchise consultant can help you review the document, and you should engage a franchise attorney as well to provide expert legal guidance.

To learn more about investing in a franchise, attend our free monthly webinar, Franchise Ownership as a More Stable Career Path.  The webinar is free, but you need to pre-register, which you can do online by clicking on the linked seminar title.

You may also register by calling 866-246-2884.

Most potential franchisees know that an important part of doing their due diligence is talking to existing franchisees.  Asking the right questions to get the answers to provide insightful guidance is key; here are 10 questions to ask a franchisee:

1. How is your relationship with the franchisor?
2. Are you making money?
3. Have you recouped your investment?
4. Have you experienced any hidden or unexpected costs?
5. Has anything surprised you about operating this business?
6. What kind of training and support were you provided?
7. What kind of marketing support do you receive?
8. Does the franchisor operate online?  Can you?
9. Would you buy this franchise again?
10. Why are you no longer a franchisee? (Be sure to talk with at least one or two former franchisees; if a franchisee was terminated, be sure to get both sides of the story.)

To learn more about researching a franchise, attend our free monthly webinar, Franchise Ownership as a More Stable Career Path.  The webinar is free, but you need to pre-register, which you can do online by clicking on the linked seminar title.

You may also register by calling 866-246-2884.

Franchisors are required by law to provide potential franchisees with a Franchise Disclosure Document but there are also things you should be doing on your own as part of a good due diligence process, including:

FDD follow-up. Read the Franchise Disclosure Document thoroughly and follow up with the references and contacts provided in the document.  This will include a list of existing franchisees in your area.  If you can, interview them in person.

Scrutinize potential earnings promises.  If a franchisor is promising you a certain level of earnings, ask for the basis for these claims in writing.

Verify success stories.  If not readily provided, ask the franchisor to give you the number and percentage of existing franchisees that are making what they claim you will be making.

Shop around.  Don’t fall in love with the first franchise opportunity that you come across; if you like the sector, there are probably others in the same business you should be examining.

Resist sales pressure.  If you are feeling pressured to invest now, proceed with caution.

Compare the contract.  Be sure to compare the franchisor contract with the promises that were made to you in the sales pitch.

Get help.  A qualified franchise consultant and a franchise attorney are invaluable assets to those searching for the best possible franchise opportunity.

For more information on investing in a franchise, attend our free December 18 webinar, Franchise Ownership as a More Stable Career Path.  The webinar is free, but you need to pre-register, which you can do online by clicking on the linked seminar title.

You may also register by calling 866-246-2884.

Whether you’re looking to buy a franchise as an investment opportunity or for a totally new career, there are 7 things you should look for in the franchise business you eventually choose:

1.  A quality product or service – be sure your franchise business is in business to sell quality products and services to customers, not just in business to sell franchises.

2.  Strong franchising culture – your franchisor should have franchising as its primary method of distribution.

3.  Existing market with strong demand – your franchise should have established market demand for its products or services.

4.  Good brand reputation – one of the hurdles you don’t want to have to overcome is buying into a brand with a tarnished reputation, no matter how cheap the investment may be.

5.  Strong marketing and business plans – a strong business and marketing plan is an indicator that a franchisor is invested in your success.

6.  Good relationship with franchisees – be wary of any franchisor that has a high failure rate or has initiated lawsuits against is franchisees.

7.  Good sales and earnings data – look for franchisors that can provide you with strong sales and earnings data that you have the potential for getting a good return on your investment.

To get all the information you need to make an informed decision about investing in a franchise, attend our free November 27 webinar, Franchise Ownership as a More Stable Career Path.  The webinar is free, but you need to pre-register, which you can do online by clicking on the linked seminar title.

You may also register by calling 866-246-2884.

With more than 3,000 franchise opportunities available today, it can be incredibly difficult to decide which one is the perfect fit for you.  Working with a franchise broker is one way to get expert help in narrowing the field; here are 5 more tips for finding the right franchise:

Discover your niche.  Start first by looking at which business sector might be a good fit for what you want to achieve as a business owner.  Look at the growth opportunities of each sector and how they perform during good times and bad.  Marry these with your own desires in terms of whether you want to be a hands-on or hands-off operator and other personal likes and dislikes.

Talking to existing franchisees.  Ask about their working relationship with the franchisor and with each other.  Ask if their financial expectations have been met.  Ask if they would recommend the franchise to a friend or family member.

Be a customer.  Visit franchise locations as a customer to see if the customer experience is something you can, or even want to deliver day in and day out.

Scour the FDD.  Dissect the Franchise Disclosure Document with the help of a qualified franchise attorney, paying particular attention to financials, litigation and fees.

Visit the franchisor.  Make a trip to franchise headquarters and meet with the management team.  Is it an environment that gives off positive energy, and do employees seem happy to be there? 

For more information on finding the right franchise for you, attend our free October 25 webinar, Franchise Ownership as a More Stable Career Path.  The webinar is free, but you need to pre-register, which you can do online by clicking on the linked seminar title.

You may also register by calling 866-246-2884.

When evaluating a franchise opportunity, there are many factors to be considered beyond how your skill set fits with the potential franchise business.  Here are 5 key factors every potential franchisee should be considering:

Financials.  Gathering information on how much you can expect to make – not only from operating the business but potential resale – should be top of mind when doing your discovery on franchise opportunities.  Examining trends for sales, margin and profits can give you insight into what kind of returns you can reasonable expect.

Business model.  You want to know the business you are investing in will stand the test of time and not be unusually vulnerable to economic fluctuations. 

Marketing.  Is the organization well organized to be able to help you get and keep customers in a cost effective manner?  You also want to be sure you have access to marketing support beyond the initial launch period.

Support.  Does the franchisor provide franchisees with ongoing support for training, sales, planning, purchasing, finance and accounting, etc.? 

Viability.  You want to be sure your franchisor will be around for a long time; if you are particularly risk adverse, you probably don’t want to invest in a new idea.  Look for not only past performance but also future plans for extending the success of the brand over time.

To learn more about a proven process for evaluating franchise opportunities, attend our free August 23 webinar, Franchise Ownership as a More Stable Career Path.  The webinar is free, but you need to pre-register, which you can do online by clicking on the linked seminar title.

You may also register by calling 866-246-2884.

If you are like a lot of Americans, you have probably thought about starting your own business at one time or another.  Entrepreneurship is in our national DNA; we are a nation of builders, and many workers who’ve rolled with the punches this economy has delivered over the past few years are responding with renewed enthusiasm to buy a business or start one from scratch.

As a Texas franchise business broker, I meet with people every day who are looking for a way to be their own boss.  We discuss the economic climate, but more importantly is a realistic assessment of whether or not you are willing to take on some of the risks – and there are always risks – that are necessary to succeed as a new business owner.  And if you are, then now is always the best time to buy a business.

Favorable Indicators for Start-Ups

There are currently some favorable market indicators for buying a business today, including:

Banks Are Lending Again -- The bankers are back and approved loans are happening again.  The Thomson Reuters/PayNet Small Business Lending Index was up 18% in 2011 (a 4-year high).  With a federal funds rate of .25% (the interest rate at which depository institutions actively trade balances held at the Federal Reserve), lenders are duly-incented by the government to close loans.  Moreover, the SBA guarantee rate has increased to 90% (up from 75%) which allows lenders to sleep even better at night.  And finally, the loan maxes have increased in both the 7a and 504 programs to $2 million and $5 million, respectively.  So, most sized projects are ‘in play’ again.   Credit Unions too, have ratcheted up their commercial lending portfolios.  New legislation is also paving the way for them to be able to increase their loan base up to 25% of their assets. 

Commercial Rents Are Low -- Dollars per square foot and other costs like CAM (Common Area Maintenance) are down across-the-board and across the country.  And, there are prime locations that are available that would not normally be in a ‘normal’ environment.  You also see flexible lease terms being agreed-to like never before, including shorter commitment periods and easy out clauses. 

Market Share Up for Grabs -- While companies are slashing marketing budgets and taking customer/client relationships for granted, new market entrants with the play-to-win approach are grabbing these customers and accounts and gobbling up market share.

If you need help with your business search, contact our franchise consultant team today at 866-246-2884 or visit www.eAuth.com.

The Wall Street Journal (online edition) just ran a great article (http://online.wsj.com/article/SB10001424052748704204304574543610390266916.html on the importance of franchisee validation surveys. 

Our feeling is that the more transparent a Franchisor is willing to be, the less 'buyers remorse' there will ever be.  These reports can be a real clue-into the culture of the system too.  As well, it can save a prospective Buyer days/weeks/MONTHS in the research and Due Diligence process by obtaining such a research report from a reputable company with no ties or vested interest in the Franchisor. 

That has always been one of the reasons why I have never put much stock in the 'Online Rankings/Polls' that get put out by magazines each year -- the ranking criteria is not disclosed and some top-ranked companies that make it in year after year are some of the absolute worst franchise options out there.

These 3rd-party, independent research companies, like FranSurvey-The Franchise Research Institute are at least unbiased and here you can be rest-assured that 'the data don't lie'!