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 franchisor been in business?
- How many franchised outlets currently exist? Where are they located?
- How much is the initial franchise fee and any additional start-up costs? Are there any continuing royalty payments? How much?
- What management, technical, and ongoing assistance does the franchisor offer?
- What controls does the franchisor 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 to 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 franchisors 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 franchisors 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 franchisor 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 franchisor'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 franchisors expect you to comparison shop and
to investigate their offering. A good deal today should be available tomorrow.
Study the Franchisor's Offering
Do not sign any contract or make any payment until you have the opportunity to
investigate the franchisor's offering thoroughly. As will be explained further in the next
section, the FTC's Franchise Rule requires the franchisor 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.
Because investing in a franchise can entail a significant investment, you should have an
attorney review the disclosure document and franchise contract and have an accountant
review the company's financial disclosures.
Learn more about:
Components of a Typical Franchise System
Before Selecting a Franchise System
Selecting a Franchise
Investigating Franchise Offerings
Additional Sources of Information
Information courtesy of the Federal Trade Commission.
Back to Franchises
