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How Do I Evaluate Potential Earnings of A Franchise?


Well, the first thing you do is not accept at face value any numbers that are presented to you. You need to do exceedingly strong due diligence and you need to, if possible, to talk to franchisees in the system and find out how things are working out for them financially, and if you cultivate a relationship with some of those franchisees, they will share with you their financial information. You sometimes have to be careful with franchisees because they want to be part of a successful brand, and they may be a little bit reluctant, but it is possible to get that information.

The other thing that I think is very important is to use an accountant and have an objective third party look at the claims and then give you their input as to what is reality.

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