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"Common sense" crucial in franchising

By: Deborah Bates
06 May 2011

"Common sense" is vital when deciding which of the best franchise opportunities to invest in.

That's according to investment expert, Richard Holden, writing for The Franchise Magazine.

He claimed that deciding which franchise to invest in is a complex process, but by asking "the right questions" and being inquisitive, it could be made easier.

Holden argued: "If you're planning on investing in a franchise, you need to be sure it's the right one for you. The only way to find out is to ask some probing questions."

"Common sense will take you a long way. Always remember, you'll...need to reply on your own judgement before investing in a particular franchise."

The expert went on to say that analysing the history of the brand overall, as well as its current and predicted financial situation was the best place to start. He advised: "As to see the brand's financial accounts for the last three years.""

Also, understanding how strong the overall market sector is can prove vital; as well as investigating how developed it is, and if the franchise offers any "unique selling points" or a "competitive advantage" over its rivals.

Holden concluded by stating that only by doing this would a franchisee and franchiser build a relationship of "mutual trust and respect," before adding: "You must be 100 per cent comfortable with the proposed investment."

He was not the only person to comment on how to pick a franchise, with fellow expert, John P Hayes, telling that there were over 90 questions potential investors should ask of their franchisers before signing on the dotted line.

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