Before getting too involved with a particular franchise, research different types of franchises and develop lists of which criteria suit your investment limitations, experience and abilities, and goals. 

Your Investment 
Before you begin to explore investing in a franchise, determine the maximum you can afford, as well as the amount you feel comfortable investing (the two may not be the same!)

• How much money do you have to invest?
• How much money can you afford to lose?
• Will you purchase the franchise by yourself or with partners?
• Will you need financing and, if so, where can you obtain it?
• Do you have a favorable credit rating?
• Do you have savings or additional income to live on while starting your franchise?

Your Abilities 
Even if you have plenty of money to purchase a franchise, it will do you no good if you don't have the appropriate skill set to make the business succeed.

• Does the franchise require technical experience or relevant education, such as auto repair, home and office decorating, or tax preparation?
• What skills do you have? Do you have programming, bookkeeping, or other specialized skills?
• What knowledge or talents can you bring to a business?
• Have you ever owned or managed a business?

Your Goals 
Consider the industry or industries that interest you before selecting a specific franchise system. Ask yourself whether you have ever considered working in this industry before, and whether you can see yourself engaged in this line of work for the next twenty years. If the industry does not appeal to you or you are not suited to work in that industry, do not allow anyone to convince you otherwise! Spend your time focusing on those industries that offer a more realistic opportunity.

• What are your goals?
• Do you require a specific level of annual income?
• Are you interested in pursuing a particular field?
• Are you interested in retail sales or performing a service?
• How many hours are you willing to work?
• Do you want to operate the business yourself or hire a manager?
• Will franchise ownership be your primary source of income or will it supplement your current income?
• Would you be happy operating the business for the next 20 years?
• Would you like to own several outlets or only one? 

Pre-Purchase Detective Work 
In addition to the routine investigation that should be conducted prior to any business purchase, potential franchise buyers should be able to contact other franchisees before deciding to invest. They should also obtain a uniform offering circular containing vital details about the franchise's legal, financial, and personnel history before signing a contract.

Reasonable Expectations
Before signing, franchisees should make sure they will have the right to:

• use the franchise name and trademark,
• receive training and management assistance from the franchiser,
• use the franchise's expertise in marketing, advertising, facility design, layouts, displays, and fixtures, and
• do business in an area protected from other competing franchisees.

In some cases, the franchisee may negotiate to have the franchiser help obtain building permits, purchase or lease equipment, signs and supplies, and construct or remodel the business premises.

Possible Pitfalls 
Always keep in mind that the contract between the two parties usually benefits the franchiser far more than the franchisee. The franchisee is generally subject to meeting sales quotas and is required to purchase equipment, supplies, and inventory exclusively from the franchiser. The franchiser often has the right to terminate the franchise if it fails to operate the business according to the agreement, becomes delinquent on royalties, or violates other contract specifications.

Professional Help  
The tax rules surrounding franchises are often complex. As a prospective franchisee, you should consult an attorney, preferably a specialist in franchise law, to assist you in evaluating the franchise package and tax considerations. You may also need an accountant to determine the full costs of purchasing and operating the business as well as assess your potential profit as the franchisee.

References:
• Small Business Administration

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