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Six Ways To Evaluate A Franchise So You Don’t End Up With A Lemon

The AAFD’s Franchise Search To-Do List

By Published On: January 8th, 2013

Part 8 of the AAFD’s 10-Part Road Map to Buying a Franchise.

Researching and assessing possible franchises to buy is an exciting process. After all, you’re taking concrete steps to changing your life in a big way. That’s why it’s so important to make sure that you take this process seriously, ask potential franchisors the right questions, and make sure you look into every possible franchise opportunity with a critical eye.

To help you on your way, I’ve devised a powerful to-do list that includes the most important things you need to do when searching for a franchise to buy. Review this list carefully and keep it handy when you start your franchise search process. If you’re already knee deep in the process or leaning toward a particular franchise, see if there are any steps in this list that you’ve missed, and then go back and complete them.

Be smart in your franchise search – your future career is on the line!

The AAFD’s Franchise Assessment To-Do List

  • Determine whether your top franchisor(s) recognizes an Independent franchisee association, such as an AAFD chapter, and collectively bargains with its franchisees. If not, consider this a big red flag.
  • Determine your top franchisor’s reputation for fairness and support for its franchise system. (This information can be found by questioning current franchisees)
  • Buy a notebook for each franchise you are interested in pursuing and take clear notes when you research the company and whenever you contact them. (You can also keep electronic notes on your computer or tablet).
  • Make a permanent file for each franchisor you’re investigating and keep all the information you gather in your file. Your file can be a physical file folder or an electronic file on your computer or tablet. Some prospective franchisees prefer to have both.
  • Contact your prospective franchisors to learn about their application process. Request a Franchise Disclosure Document (formerly called a “Uniform Franchise Offering Circular”) for each franchise system of interest to you.
  • Never pay money before receiving a FDD you request. By law, the franchisor should not charge you fees until you have reviewed your offering circular for ten days.
  • Make a record of ALL conversations you have with each franchisor. In your notes, include the date, time, person you spoke with, promises that person made, the questions you asked, and the answers you were given. Retain this information for future discussions with your franchise attorney or franchise accountant.

Use the AAFD’s recent post “Eight Things to Look for in Selecting a Franchise” and make sure to read the AAFD’s “Franchise Bill of Rights” to aid you in your review and negotiations.

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Written by : Robert L. Purvin

Robert Purvin is the Chairman and CEO of the American Association of Franchisees and Dealers, a national non-profit trade association that is dedicated to supporting and protecting the rights of franchise owners. The AAFD's mission is to define, identify and promote Total Quality Franchising practices, and the AAFD supports is mission by: Promoting strong and effective independent franchisee associations as affiliated chapters of the AAFD. The development of the AAFD's Fair Franchising Standards, the most comprehenisve body of negotiated principles of recommended franchise practices in existence. The advocacy of fair and balanced franchise agreements and relationships that respect the legitimate business interests of both franchisors and franchisees for the good of the franchise relationship. The education of franchisees and prospective franchisees by the development and publication of the AAFD Fair Franchising Standards and the promotion of the AAFD Franchisee Bill of Rights.