THE DO’S AND DON’TS OF BUYING A FRANCHISE: 10 CRITICAL MISTAKES TO AVOID AND SMART MOVES TO MAKE

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Buying a franchise can be a fast track to business ownership — but it’s not without risks. Too many aspiring franchisees jump in without fully understanding what they’re signing up for. Hidden fees, vague earnings claims, and a lack of operational support can quickly turn a dream into a financial disaster. In this guide, you’ll uncover the critical do’s and don’ts of franchise ownership, learn how to spot red flags in the Franchise Disclosure Document (FDD), and discover what successful franchisees do differently. Before you invest a dollar, read this first — it might save you a fortune.

THE DO’S AND DON’TS OF BUYING A FRANCHISE: 10 CRITICAL MISTAKES TO AVOID AND SMART MOVES TO MAKE

By Gary Occhiogrosso

Buying a franchise is one of the fastest ways to step into business ownership with a proven concept and built-in support. For aspiring entrepreneurs, it offers the allure of being your own boss—while benefiting from the brand recognition, systems, and training of an established company.

But franchising isn’t a guaranteed shortcut to success. If done right, it can be a powerful path to financial independence. Done wrong, it can drain your savings and leave you stuck in a one-sided agreement. Hidden fees, unclear profit potential, and lack of transparency are just a few of the traps that catch new franchisees off guard.

This guide breaks down the essential do’s and don’ts of buying a franchise—from how to read the Franchise Disclosure Document (FDD) to spotting red flags before you invest. If you’re considering this path, take a few minutes to read through. It might just save you from making a costly mistake.

The Do’s

  1. Do Read the Franchise Disclosure Document (FDD) Carefully
  2. Do Speak with Existing Franchisees
  3. Do Analyze the Unit Economics
  4. Do Investigate the Franchisor’s Leadership Team
  5. Do Consider Your Personal Fit with the Brand and Culture

The Don’ts

  1. Don’t Skip Legal Review by a Franchise Attorney
  2. Don’t Underestimate the Total Investment and Working Capital Needs
  3. Don’t Rely Solely on Franchisor-Provided Numbers
  4. Don’t Ignore the Importance of Location (if brick-and-mortar)
  5. Don’t Rush the Decision—No Matter the “Limited-Time Offer”

What to Watch Out For

  • Overly aggressive salespeople
  • FDDs with missing or vague Item 19 earnings claims
  • Lack of support structure
  • Litigation history or excessive turnover in franchisees
  • “New” systems with no proven track record

Conclusion

  • Recap the importance of due diligence and discipline.
  • Encourage readers to take their time, ask tough questions, and align the opportunity with their personal and financial goals.

 

Primary Industry Sources

  1. International Franchise Association (IFA)
    • www.franchise.org
    • Articles, research reports, and legal guidance on FDDs, franchisee responsibilities, and system compliance.
  2. Federal Trade Commission (FTC) – Franchise Rule
  3. Franchise Times
    • www.franchisetimes.com
    • Provides coverage of franchise trends, litigation, unit performance, and emerging brands.
  4. Franchise Business Review (FBR)
  5. FranData
    • www.frandata.com
    • Offers research on franchise performance, lending data, and validation insights.

Supporting Business and Legal Resources

  1. SCORE (Service Corps of Retired Executives)
    • www.score.org
    • Free business mentoring and resources for evaluating franchise opportunities.
  2. Small Business Administration (SBA)
    • www.sba.gov
    • Guidance on franchise financing, due diligence, and the SBA Franchise Directory.
  3. Entrepreneur Franchise 500 Reports
  4. Franchise Law Solutions (Lanard & Associates or similar legal firms)
  5. Franchise Direct & Franchise Gator

 

LEARN MORE HERE

 

 

 

 

 

 

 

This article was researched, outlined and edited with the support of A.I.

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