A Checklist for Finding the Best Franchise

Published on October 27, 2016

Share Tweet Share

Prospective franchisees need a checklist for finding the best franchise. The checklist should include the type of territory, type of franchise and the investment.  Once a franchise is selected, the next step for finding the best franchise , should be checking the franchise performance. One of the best ways is to focus on areas that measure the risk of the franchise investment. Here are seven areas used by FranchiseGrade.com to grade a Franchise Investment Profile. It’s based upon the Franchise Disclosure Document and compares franchise performance to franchise systems and the franchise industry.

Checklist for Finding the Best Franchise

  1. Franchise Investment Structure

Investment Structure presents franchise investment information including the initial franchise fees, working capital requirements and investment costs.

  1. Royalty and Continuing Fees

Ongoing fees show total royalties and reoccurring fees, including various advertising fund fees. The total fees should be known so that a candidate understands the dollars that will be paid in fees.

  1. Key Franchisee Rights

Franchisee territory and related contractual rights represent one of the key areas to consider when evaluating a franchise opportunity.  The indicators to review include; the quality of the territory, the potential for continued growth and whether the territory is both protected and exclusive.

  1. Franchise Litigation Review

The disclosure of past and current franchise litigation provides a look into the state of franchise relations. A lack of much litigation in the FDD can indicate a good franchise system with satisfied franchisees.

  1. Franchise System Turnover

Franchisee system turnover includes franchisee terminations, franchisee ceased operations and franchisee transfers. The best franchise systems have low franchisee terminations and ceased operations.

  1. Franchise System Growth

One of the most important features of the best franchise systems is the growth of the franchise network.

  1. Item 19 Financial Performance Representation

Franchise candidates need to have good franchisee financial data to construct a pro-forma income statement and cash flow projection. The best franchises show this information.

Reviewing these checklist items can help you find the best franchise. You can search our app to compare over 2,500+ franchises and see how this checklist helps find those healthy franchise opportunities.

Written by FranchiseGrade.com Team


Thinking about buying a franchise?
Not sure how much can you afford?

Fill out our Franchise Affordability Calculator




Related Articles

Franchising and Murphy’s Law

When it comes to franchising, Murphy’s Law comes into play more often than desired. In many cases, a new franchise takes off slower than anticipated.

Read More

Growing Your Franchise System Takes More Than Leads

The emphasis on franchise system growth is as old as franchising, having been accepted as the indicator of a quality franchise.

Read More

Franchisors Need to Avoid Wasting Their Franchisee Leads

When franchisors strategize their system growth, the major focus is placed on the amount and quality of their franchisee leads.

Read More

The Two Traits You Need in A New Hire

After owning 4 successful businesses, in different business sectors, there are two common attributes my good hires have shared; Curiosity and Tenacity.

Read More

Monitoring your Consumer Sentiment Is Key to Selling your Franchise

In the franchise industry, franchisors can view comparisons and relationships between consumer satisfaction for the products or services a franchise offers.

Read More

The TOP 4 Traits Of A Successful Franchise System

These traits lead to low franchisee turnover, an attractive investment opportunity, outlet growth and brand recognition and consumer satisfaction.

Read More

The #1 Reason You Are Scared to Open Your Own Business

Owning a business is hard. Each venture has its differences – different customers, different go-to-market strategies, different business partners.

Read More