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What to watch for when Shopping at a Franchise Expo

Guest post by: John Henning

Article Overview: Attending a franchise exposition allows you to view and compare a variety of franchise possibilities. Keep in mind that exhibitors at the exposition primarily want to sell their franchise systems. Be cautious of salespersons who are interested in selling a franchise that you are not interested in. Before you attend, research what type of franchise best suits your investment limitations, experience, and goals. When you attend, comparison shop for the opportunity that best suits your needs and ask questions.

What to watch for when Shopping at a Franchise Expo

Attending a franchise exposition allows you to view and compare a variety of franchise possibilities. Keep in mind that exhibitors at the exposition primarily want to sell their franchise systems. Be cautious of salespersons who are interested in selling a franchise that you are not interested in. Before you attend, research what type of franchise best suits your investment limitations, experience, and goals. When you attend, comparison shop for the opportunity that best suits your needs and ask questions. Know How Much You Can Invest

An exhibitor may tell you how much you can afford to invest or that you can't afford to pass up this opportunity. Before beginning to explore investment options, consider the amount you feel comfortable investing and the maximum amount you can afford.

Know What Type of Business is Right for You

An exhibitor may attempt to convince you that an opportunity is perfect for you. Only you can make that determination. Consider the industry that interests you before selecting a specific franchise system. Ask yourself the following questions:

Have you considered working in that industry before?

Can you see yourself engaged in that line of work for the next twenty years?

Do you have the necessary background or skills?

If the industry does not appeal to you or you are not suited to work in that industry, do not allow an exhibitor to convince you otherwise. Spend your time focusing on those industries that offer a more realistic opportunity.

Comparison Shop

Visit several franchise exhibitors engaged in the type of industry that appeals to you. Listen to the exhibitors' presentations and discussions with other interested consumers. Get answers to the following questions:

How long has the franchiser been in business?

How many franchised outlets currently exist?

Where are they located?

How much is the initial franchise fee and any additional startup costs? Are there any continuing royalty payments? How much?

What management, technical, and ongoing assistance does the franchiser offer?

What controls does the franchiser impose?

Exhibitors may offer you prizes, free samples, or free dinners if you attend a promotional meeting later that day or over the next week to discuss the franchise in greater detail. Do not feel compelled to attend; rather, consider these meetings as one way to acquire more information and ask additional questions. Be prepared to walk away from any promotion if the franchise does not suit your needs.

Get Substantiation for Any Earnings Representations

Some franchisers may tell you how much you can earn if you invest in their franchise system or how current franchisees in their system are performing. Be careful. The FTC requires that franchisers who make such claims provide you with written substantiation. This is explained in more detail in the section "Investigating Franchise Offers." Make sure you ask for and obtain written substantiation for any income projections or income or profit claims. If the franchiser does not have the required substantiation or refuses to provide it to you, consider its claims to be suspect.

Take Notes

It may be difficult to remember each franchise exhibit. Bring a pad and pen to take notes. Get promotional literature that you can review. Take the exhibitors' business cards so you can contact them later with any additional questions.

Avoid High Pressure Sales Tactics

You may be told that the franchiser's offering is limited, that there is only one territory left, or that this is a one-time reduced franchise sales price. Do not feel pressured to make any commitment. Legitimate franchisers expect you to comparison shop and investigate their offering. A good deal today should be available tomorrow.

Study the Franchiser's Offering

Do not sign any contract or make any payment until you have the opportunity to investigate the franchiser's offering thoroughly. As will be explained further in the next section, the FTC's Franchise Rule requires the franchiser to provide you with a disclosure document containing important information about the franchise system. Study the disclosure document. Take time to speak with current and former franchisees about their experiences. As investing in a franchise can entail a significant commitment, you should have an attorney review the disclosure document and franchise contract and have an accountant review the company's financial disclosures.

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Article Tags: franchise expo



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Re: Info for would be franchisers... - [quote="Sebastien":1d29sdv1]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to. I just want to mention that all these magazines are NOT franchisee oriented. I mean these magazines are for franchise professionals. If you're looking to buy a franchise, you won't find much information in there. To answer your question, getting published in Franchise Times was fairly easy. I don't want to brag too much but I think I am known in the franchise industry. I was the marketing guy at Franchise.com for a few years before joining my new company, the World Franchising Network. So people know me and I have a very good relationship with Nancy Weingartner, the Managing Editor at Franchise Times. I was talking with her at the last Franchise Expo South in Miami and she mentioned she'd like me to be profiled. I was like "ok, sure!". I like this franchise executive profile thing in Franchise Times as it is rarely BS. People are usually really natural in there.[/quote:1d29sdv1] Thanks for the follow up Sebastien! And I can't say that I'm surprised that networking with the right people and managing your relationships with them properly are the keys to being published. I guess the old adage holds true of "it's not who you know, but who knows you" that's important.
Re: Enticing Franchises - Top 9 List - All Franchise listed above are in millions of dollars. Do you have the list of Franchise in thousands
how much for a franchise fee? - Dear Colleague There is no easy answer to this question. Things to consider: [list=] The sizeof the Franchise Clent base Expected Turnover Intellectual Property costs (recoup) Number of Franchises Number of employees Original Set up costs Franchise admin costs An example: A franchise that I was involved in setting was to a simple "lawn mowing/home repair" franchise. The Franchise included national/local advertising - preparation of client lists - general admin - central accounting etc The Franchise involved 300-500 clients - and an annual turnover of about $300,000 . The annual franchise fee was $30,000. Hope that this gives you some idea Take care Ian[/list]
Re: Franchise Surveys - Another good tool to researching a franchise is to speak with their existing franchisees. This contact information is included in most Franchise Disclosure Documents. In order to get a Franchise Disclosure Document or FDD as it is often referred to, you will have to complete a basic franchise application. The franchisor will then usually provide you with the FDD at that time. Included in that book of information is a list of the existing franchisees, the contract, the investment information etc... This information is required by Federal Law to be disclosed to your prior to making a purchase. So be sure to do your research and start with the Franchise Documents to get the initial information.
Buy a franchise, get 4 free! - I just called a franchise company (I'll keep the name for me) to ask them if they wanted to be listed in the upcoming edition of our top seller publication, the Bond's Franchise Guide. I knew I was gonna be a hard sale. I met the franchisor at the International Franchise Expo in DC a couple weeks ago and he's one of these guys who wants the world for free. I hadn't had the time to tell him about the price that he went "listen, I have a great deal for you. You give me a free listing in your Guide and I'll give you a free franchise!". I then remembered seeing on his booth a "marketing message" saying "Buy 1 franchise, get 4 Free". Basically, you buy the rights for a territory and they give you 4 other territories for free. I kindly declined the offer, trying to be as polite as I could to not offend this man. I knew I was wasting my time with him but I kept going anyways. For 5 solid minutes he tried as hard as he could to have me open a franchise in San Diego for free. I didn't want to confront him (after all, he's still a potential client) but I was saying to myself "what kind of franchise is that if you give it away to anyone and everyone?" This franchisor has only one thing in mind: opening as many franchise locations as possible. But he forgot one of the very basics of franchising: you have to have qualified franchisees... Duh! This means that because someone has the money doesn't automatically means he's going to be a good franchisee. Most franchisors are well aware of that. They'd rather see a very well qualified potential franchise buyer with little money than a totally unqualified potential franchisee with a lot of cash on hand. Those types of franchises usually don't last long. Why? Simply because the system starts collapsing from the inside: franchisees are not adequate for the system thus, they don't operate their store correctly. The brand image starts getting worse. The franchisor can't support its franchisees because he's too busy opening other franchises. Next thing you know, you're reading an article in the newspaper about how this franchise filed for bankruptcy. What do you guys think? If I come to you and say "if you buy a franchise, I'll give you 4 more for free". What would you think?


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