A Checklist for Finding the Best Franchise

<p>Prospective franchisees need a checklist for<a href="https://app.franchisegrade.com/sign-up&quot; target="_blank"> finding</a><a href="https://app.franchisegrade.com/sign-up&quot; target="_blank"> the best</a> 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.</p>
<!--break-->

<p>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&rsquo;s based upon the <a href="http://www.franchisegrade.com/resource-tools/components-of-an-fdd/&quot; target="_blank" title="Components of an FDD">Franchise Disclosure Document</a> and compares franchise performance to franchise systems and the franchise industry.</p>

<ol style="list-style-type:decimal;">
<li><strong>Franchise Investment Structure</strong><strong><img alt="" src="http://www.franchisegrade.com/wp-content/uploads/2016/07/franchise_chec…; style="width: 320px; height: 240px; float: right; margin-left: 5px; margin-right: 5px;" /></strong></li>
</ol>

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

<ol style="list-style-type:decimal;">
<li value="2"><strong>Royalty and Continuing Fees</strong></li>
</ol>

<p>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.</p>

<ol style="list-style-type:decimal;">
<li value="3"><strong>Key Franchisee Rights</strong></li>
</ol>

<p>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.</p>

<ol style="list-style-type:decimal;">
<li value="4"><strong>Franchise Litigation Review</strong></li>
</ol>

<p>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.</p>

<ol style="list-style-type:decimal;">
<li value="5"><strong>Franchise System Turnover</strong></li>
</ol>

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

<ol style="list-style-type:decimal;">
<li value="6"><strong>Franchise System Growth</strong></li>
</ol>

<p>One of the most important features of the best franchise systems is the growth of the franchise network.</p>

<ol style="list-style-type:decimal;">
<li value="7"><strong>Item 19 Financial Performance Representation</strong></li>
</ol>

<p>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.</p>

<p>Reviewing these checklist items can help you find the best franchise. You can <a href="https://app.franchisegrade.com/sign-up&quot; target="_blank" title="Find The Best with our app!">search FranchiseGrade.com&#39;s app</a> to compare over 2,500+ franchises and see how this checklist helps find those healthy franchise opportunities.</p>

Profile picture for user Ed Teixeira