Franchise Caught Your Eye? Better Check the Financials

Many people who want to go into business for themselves choose a franchise because it's supposed to remove a lot of the risk. But a franchise can represent considerable risk itself.

If you're going to consider buying into one, whether a fast-food restaurant, hair salon, moving company, or fruit arrangement franchise, you need to go through the potential numbers with a fine-tooth comb. Here are some of the important points and warning signs you need to know.

Understand how franchising works

A central franchisor creates a concept in some industry and an approach to successful operations that is repeatable. You license a brand that might help bring customers in. More importantly, you gain access to a way to run a business that avoids many mistakes you might otherwise make.