When buying a franchise, it is important to gather as much information as possible. While this primarily means gathering information about your chosen franchise opportunity, gathering information about competing franchise opportunities can prove valuable as well.
But, most franchisors will only give copies of their Franchise Disclosure Documents (FDDs) and franchise agreements to serious candidates, and you cannot necessarily rely on details posted by third-party sites online (the information on these sites is often outdated). So, how can you compare franchise opportunities?
5 Sources of Information for Comparing Franchise Opportunities
1. Franchise Trade Shows and Expos
Franchise trade shows and expos provide opportunities for prospective franchisees to meet with franchisors’ representatives face-to-face in a relatively low-pressure environment. There are plenty of these events across the United States each year, with the International Franchise Expo easily being the largest and most well-known. If you are serious about buying a franchise, visiting a trade show or expo may be worth your time, as you will be able to learn more about a multitude of different franchise opportunities.
2. Franchisors’ Websites
While franchisors need to be careful about disclosing too much information on their websites, you can often find basic data about initial franchise fees, royalties, and system standards online. In many cases, this information will be presented in a table comparing the franchisor to its competitors. Of course, some franchisors’ websites are better than others, and any comparison tables you find are likely to be heavily skewed in favor of the franchisor that published them.
3. On-the-Ground Reconnaissance
Are there competing franchises in your local area? If so, there is nothing wrong with paying them a visit. What do you see? What do you like? What don’t you like? Oftentimes, an in-person visit can provide a wealth of information that you simply won’t find on paper.
4. Franchise Consultants
There are lots of franchise consultants out there, and there are even franchise consultant franchises. Before paying any money to a consultant, it is important to do your research. However, a good and well-established consultant should have a long history of working with franchisees in a variety of different franchise systems, and he or she should be able to provide valuable insight into competing franchise opportunities.
5. Franchise Attorneys
An experienced franchise attorney will be able to provide similar information, and he or she should also have access to FDDs and franchise agreements from other franchise systems. A franchise attorney will also be able to analyze key differences and similarities in depth, and provide insights far beyond simply comparing apples to apples. A franchise attorney can help you evaluate your chosen franchise opportunity in various other ways as well; and, if you decide to move forward, your attorney will be able to use his or her knowledge of competing franchise systems in negotiating the terms of your franchise agreement.
Inquire About Our Franchise Business Review Services
At the Goldstein Law Firm, we offer a variety of fixed-fee franchise business review packages for prospective franchisees. If you are thinking about buying a franchise and would like more information, you can call 202-293-3947 or contact us online for a free initial consultation.
