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How to Not Get Scammed in Franchising – Fran Finders

Overstating the truth, puffery and hype. You need to have a clear mind and a steady focus when you’re heading down the path of buying a franchise. Multitudes of voices, each with a self-serving agenda, are out there, coaxing you toward their franchise brand. Like Sirens, they beckon you. Beware.

Here are absolutely five things you need to know before investing in a franchise.

Tip One – Use your head. Firstly, think about what you want to accomplish from owning a franchise. Once you have your reason, keep that as the center point for your franchise search.

Tip Two – Review the Franchise Disclosure Document (FDD). Request and read through the document, understand the fees and your responsibilities.

Tip Three – Talk to existing owners. Perform due diligence by speaking with other owners and get their feedback as to how the brand is treating them.

Tip Four – Complete a financial forecast. Using the numbers you receive from the FDD and your validation calls, fill out your financial projections. Don’t fall in love with the business, but fall in love with the numbers.

Tip Five – Bring in experts. Enlist the aid of an attorney who specializes in franchise law to review the FDD and franchise agreement. Seek out an accountant who can review your financial projections. Find a franchise consultant to help you through the process.

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