Buying a franchise represents a different approach to starting a business, a dream shared by millions. But just as franchising represents a chance to get rich, it's also equally a chance to get stung. Content in the Guide copyright 1990-2008, Kevin B. Murphy, B.S., M.B.A., J.D. – Mr. Franchise
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Industry Trend
Is the franchise in a cutting-edge industry that is doing well currently and is projected to do well in the future despite any economic slowdown? Education, health care and home-improvement services are stable categories. Food is over-saturated generally and, except in exceptional circumstances, is not worth the high investment, long hours, headaches and marginal income.
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Total Initial Franchise Investment
In general, don't expect a franchise that requires a five-figure initial franchise investment to produce a six-figure income. As with most things in life, you get what you pay for. On the other hand, don’t assume a six-figure investment will lead to a six-figure income level. Be realistic and conservative.
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Real Business
Is this a legitimate retail business, as opposed to a "work out of your home" operation? The vast majority of work out of your home concepts produce marginal income at best.
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Franchise Management Expertise
Does the management team of the franchisor (the company selling you the franchise) have executives with demonstrated past achievement and experience in operating a franchise company (not just persons who have sold franchises)? If not, this is a big red flag.
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