I'm a bit skeptical about franchises. Do not misunderstand me; I have seen many successes in franchise. However, as we all know, the world isn't perfect, and before you jump into franchising, there are a few items I recommend you research and consider.

1. Visit existing locations

Let's start with the obvious about initial homework. If you are buying a franchise with a physical location, you should visit as many as possible. Keep in mind that it is likely that the franchisor may recommend that you visit certain locations. Although you should visit the suggested places, you should also visit others.

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2. Pay attention to the differences between brands and real estate

When visiting franchise locations, it is important to pay attention to many details. Take care of consistency. If you see different logos, different store designs or, in the case of food franchises, different menus, or, in service-based franchises, different offerings, be sure to ask the franchisor about these discrepancies.

Real estate elections matter too. If the brand relies on impulse visits rather than as a destination, visibility is essential. If the locations are in run-down shopping centers with poor visibility, these businesses are likely to struggle.

Moreover, if the locations are not maintained, don't have positive reviews online, or have a bad experience, it's not a good sign. Remember that even though you won't have any direct business relationship with these other franchises, you all represent the same brand. Therefore, it is essential that these other places are thoroughly checked.

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3. Franchisor vetting

To vet a franchisor, start by reviewing Franchise Disclosure Document, then talk to existing and former franchisees. While the franchisor may provide some contacts, it is essential to find others to get different perspectives independently.

Key questions include their experience with the franchisor, plans for additional locations, and actual sales versus expectations. If possible, talk to franchisees from closed locations to understand potential issues.

Difficulty contacting franchisors may indicate a lack of disclosure deal, which can prevent open communication. Such arrangements can be a red flag, suggesting that the franchisor may not be transparent about their operations.

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4. Demographics and construction costs

You should also dive deep into what demographic the franchisor is recommending. Whether the franchisor has figured this out yet is concerning to me. It would be better if you also make sure that the franchisor clearly understands how much the construction will cost and what service requirements they have.

Most franchisors will give a range regarding costs, which will vary dramatically. So, you really need to make sure you're doing your homework and gathering your own team of experts to help and verify.

5. Franchise Agreement

After doing your initial homework to visit existing locations and talk to existing outsiders and, if possible, former franchisees, then come up with the franchise agreement. This legal document should not be taken lightly.

As with all legal dealings, I recommend consulting with an attorney who specializes in the specific industry. There are attorneys out there who focus on franchise law. I recommend you use one in this process. Although it will cost you money, it can prevent you from getting into a situation you don't understand.

When you sign your franchise agreement, you must understand the agreement from top to bottom. For example, you should know what happens if you do not find a space within the period specified in the franchise agreement. Do you get an extension or lose the initial franchise fee you paid? You need to know if you have any territory production. Can the franchisor sell another franchise to someone who can open near you? Most franchises will have a radius protection, but I have seen some franchises not provide any. If protection is granted, it is still not sufficient to prevent oversaturation of the franchise within the trade area.

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Additionally, I have seen franchisors maintain core areas for their corporate stores and sell second or third tier markets to franchisees. If so, you are effectively competing with the franchisor, who has a better territory than you.

It's important to try to avoid surprises, and the only way to do that is to not assume anything, ask questions, and do your due diligence. If you get it right the first time, the likelihood that you will be able to become a multi-unit franchise is much higher. Remember, don't be embarrassed if you don't know the answer to something. Better to ask a question than regret not asking.