Owning a business is a great opportunity for a hardworking and hardy person, but it is imperative that you first do your homework to make sure that you set yourself up for success. Some tips for what to look for in a franchise are detailed below.

The initial investment can vary greatly depending on the chain. If it generates predictable returns then the risk is lower. A high Return on Investment is only one indicator of a good opportunity.

Find out whether your initial fee will be going to support quality training. Are the ongoing royalties that you are paying going to translate into ongoing support? The experience and knowledge that you receive through corporate training is very important and will increase your chance for success.

How much marketing is supported by your franchise and royalty fees? Positive branding and image protection are of utmost importance. What are the management’s short and long term plans for the brand?

The procedures and business systems should be clear and detailed enough for you to be able to deliver a consistent product in a well-organized way. The technology must be up to date and the success of the methods proven. An efficient process should already be in place when you acquire the franchise and the ability to follow a clear system is important. Owners who don’t carefully follow the standards of the system are more likely to fail. People patronize chains in large part because they know that they can receive a consistent product regardless of which one they choose to visit. If the product is not consistently delivered using the same high standards, people are bound to get upset.

Research the demographics of the area where you wish to site your building. If possible, find another franchisee who operates in an area of similar population density, average age or ethnicity. What regional differences might come into play? One store might thrive here while another may flounder.

Lastly, all parent companies are required to release a Franchise Disclosure Document before moving forward. Take a close look at it, especially items number 19 and 20. Item 19 is the Financial Performance Representation (FPR) and will help you to estimate a potential net operating income using the provided averages for unit volume, overhead and operating costs. Item 20 is the success rate – the higher the better!

Investigate all fees and costs. Be wary of hidden fees. Does the parent company profit from food or equipment that you are required to buy? Does it have a history of legal conflict?

Add all the costs up and subtract from the potential for profit. Are the numbers looking good? Now that you have taken all the different business aspects into consideration you can make decide whether or not to purchase a particular franchise.