Investigating Potential Franchises
If you’re thinking of acquiring a franchise, it is a good idea to first investigate the company. Although there is no uniform database that will inform you whether a company is operating legally or in good faith, there are a few leads to utilize in your investigation.
Find out if the company has registered with the Better Business Bureau or if anyone has filed a complaint against the company. You can discover if any complaints have been filed by contacting the Federal Trade Commission. Simply send a written request for information to the following address. Include in the letter the name of the company of interest as well as your name and address. Often, this is a free service to the public. The address: Freedom of Information Act Request, Federal Trade Commission, Washington, D.C. 20580.
Also, you can check out the applicable state agency for registering business opportunities. In Florida, franchisors are required to file with the Florida Department of Agriculture and Consumer Affairs, Division of Consumer Services.
Another fact to consider is whether the company has changed its name in the past. Businesses that alter their name and change their address of operation may have something to hide or wish to avoid accountability. Furthermore, it is a good idea to obtain the contact information of 10 prior franchise purchasers. Get in touch with them to find out how this franchise has dealt with others in the past. Also, make sure these references are legit and not just paid by the franchisor to give a good review. Finally, another good idea is to find out the number of other franchisees in your geographic area. It may not be a good idea to enter a saturated market.
Above all, when deciding whether or not to purchase a franchise, you can never be too careful. Not only should you consult with a franchise attorney to cover the legal requirements, but you should also consult with a franchise consultant. I recommend Alpha Growth Strategies, whose expertise can benefit any franchise across the country. They can be contacted at 417 Cheryl Court, Jacksonville, FL 32259.
