Franchising is an empowering and lucrative business opportunity with many options for growth. It enables hungry entrepreneurs to create wealth for themselves. Similar to other industries, some players are untrustworthy and looking to take advantage of potential business owners. So, how do you know if your promising franchise opportunity is rotten? Read on to learn about how to spot the red flags in franchise opportunities.

Important note: A principal reason why you work with a franchise coach is to prevent these situations from happening in the first place. I’m here if you have any questions about this topic, and if you are currently in any of these situations please call me at (407) 463-3493 so I can help. And what’s more, it doesn’t cost anything to work with me.

Something Doesn’t Feel Right

After you have done your due diligence, If a franchise opportunity doesn’t feel like the right move for your business portfolio, it’s a red flag that shouldn’t get ignored. As a franchisee, you want to be passionate and hopeful about your business venture, and your overall happiness can directly affect your business. Your customers can feel it, and you won’t be as motivated to promote your business.

You Feel Rushed

Buying a franchise, from inquiry to signing on the dotted line, usually takes between 4 to 8 weeks. If you feel that you’re being rushed into making a decision, being rushed through the purchasing process, or are required to pay the franchising fee upfront, it’s a red flag.

Know this: a good franchisor consultant wants to make sure that you’re not only comfortable every step of the way, but that the franchise opportunity itself is a good fit for you and your lifestyle.

Franchisee-Related Litigations

When looking for a franchise opportunity, do your due diligence and research the franchise you want to buy. Checking the Franchise Disclosure Document is an excellent way to educate yourself on the history of the franchise’s dealings and decide on whether or not they’re a viable option.

One of the things you and your franchise consultant should also check for in the FDD is any franchisee litigations on record. If so, look into the cases and find out what the issues were. Are they problems such as franchisees not paying their fees or more concerning situations involving the franchisor mistreating the franchisee? If it’s more of the latter, it’s a red flag for sure.

Other Franchisees Provide Negative Feedback

As you decide whether you want to purchase a franchise, ask your franchise consultant if they can connect you to other franchisees so you can interview them about their experiences working with the franchisor. Get feedback from them; did they keep their promises? If they appear unhappy with their experiences, financial results or warn you of things to look out for before purchasing, it may be a red flag. You might want to avoid that franchise opportunity. Also, keep in mind that there are some people who don’t follow the system or the rules. So when you get negative feedback, try to determine if this franchise followed the plan.

High Franchisee Turnover Rate

It’s also wise to check the FDD for details here, too, for signs of a high franchisee turnover rate. Look for further information like how many franchisees waved the white flag, why they shuttered, and how long the location was open. The answers may give you insight into your potential future as a franchisee.

It Seems Too Good to Be True

There’s a reason for this saying. If an opportunity seems too good to be true, then chances are, it probably is. If the franchisor is unwilling to recognize or disclose flaws in their business, that’s a red flag. The key to a franchise’s success is transparency, and that includes the good and the bad.

 

Blackmore Franchise Consulting: Helping You Spot the Red Flags

Spotting the red flags in a seemingly promising franchising opportunity can be tough, but that’s what I’m here for! Equally, there’s a ton of work involved in finding the right franchise for your specific needs.

If you’re looking for a great franchise opportunity, look no further. Let’s begin exploring the best options for you and avoid the red flags together.

Contact Blackmore Franchise Consulting to get started!

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