In most franchise systems, the franchisor maintains a great deal of control over the product and services offered by the franchisee in order to maintain brand consistency and the reputation of his trademark or product. For example, the franchisor generally has very strict terms governing marketing, product quality, building design and operating practices. An entrepreneur should carefully examine the restrictions of prospective franchise systems to make certain he is able to work comfortably within those constraints.
An investor needs to be aware that buying a franchise from a successful company does not necessarily guarantee his own success. The purchaser must make certain he has the managerial ability required to run a business, as well as the aptitude needed for the particular franchise he chooses. If he has no mechanical aptitude, for example, he may want to stay away from franchise systems that specialize in auto repair or maintenance. He should also make certain that the success of the parent company is not a result of regional issues, that the company has the resources to offer adequate support, and that his local area has not reached a saturation point for that type of business.
When investigating particular franchise systems, a prospective purchaser should consider a number of factors. He should know exactly what is included in the franchise fee; for example, training, operations manuals, guidance in site selection, and territorial rights. The franchisor should be able to provide projections of how much capital the investor needs, how long it should take for the new franchise to open, and when the investor can reasonable expect to recover his initial investment. It is also important to know how many other franchise offices will be sold in the same area, and if there are any on-going franchise fees.