Buying a franchise can be a great move for a would-be entrepreneur who doesn’t want to create a new business from scratch. In theory, franchisees acquire a model that already works on every level, from branding to pricing to marketing. A ready clientele eagerly spends on Dunkin’ Donuts, McDonald’s and 7-11. The market has tested the best recipes for glazed crullers, Egg McMuffins and the right combo of energy drinks to stock next to the register. But making a go as a successful franchisee can be a lot more complicated than simply finding an appealing brand and plunking down some cash. For a taste of what can go wrong, see Forbes’ piece about the problems at sandwich franchise Quiznos, which paid $206 million to settle a suit brought by franchisees who claimed the chain had oversold its markets and excessively marked up supplies.
If you’re thinking of becoming a franchisee, how should you prepare yourself? We asked three professionals with extensive knowledge of the franchising world. Ed Teixeira is both a former franchisor and former franchisee, and the author of two books on franchising, including The Franchise Buyer’s Manual. Josh Brown is a Carmel, Indiana lawyer who specializes in franchising, and Sean Kelly is a former executive at the successful Amish pretzel franchise Auntie Anne’s. Kelly runs the muck-raking website, Unhappy Franchisee. They recommend you do these 12 things before you buy a franchise.