Franchise Opportunity Red Flags

What to Watch for

Warning: Signs of a Bad Franchise Opportunity

When you start exploring entrepreneurship opportunities through franchises, there are many to choose from. How do you know which is a good option versus a bad one? Learn franchise opportunity red flags to stay away from risky options.

Franchise Opportunity Red Flags

1. Lack of transparency. It should be easy to find information about the franchise, and it shouldn’t feel like you are being sold to. Expect a franchisor to be willing to answer all of your questions openly and honestly—if they don’t, be wary of their investment in your success.

2. Few successful locations. No matter how much you connect with a business opportunity, if a franchisor can’t back up their success claims with valid numbers, it’s not a company you should trust overall. Find out where their most successful and least successful locations are and what contributed to the outcome.

3. Bad Reviews from Franchisees and Customers. When looking into a company’s reputation, consider it from the perspective of two groups: current franchisees and customers. To find out if franchisees like the company, search for information about how many closed their locations. Even if the other franchisees are happy with the situation, if the business has a bad rap with customers, you’ll be fighting an uphill battle for success.

4. Little support from the franchisor. A franchisor who is in the success of your franchise location should be invested in your training. Ask what the training program is like. In addition, the best franchise opportunities offer mentors to help you throughout your business ownership journey. Before you join a company, ask how you can be connected to these people.

5. No market in your area. You may find a fantastic franchise, but that doesn’t mean it’s the right one for you. If you’re looking to open a gym franchise, you need to do your research and find out if your area even needs another fitness center. And if there’s another franchise location right around the corner, the franchisor might not be willing to give you permission to open one nearby.

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