Franchise business opportunities are one of the most popular ways to have a business in New Jersey, but unfortunately, there are many opportunities out there that are not as good as advertised. Learn the franchise business warning signs below so that any investment is a sound one that turns into a profitable venture.
How Well Are Other Franchisees Doing?
A person needs to carefully evaluate the franchise business opportunity he/she is considering before deciding to invest into it. He/She should look into a franchise disclosure document and pay careful attention to item 19 on it. This tells the person what he/she could reasonably make from this opportunity. While it is not required, it is helpful if a franchise breaks down how well its franchisees are doing in terms of tiers – first, second, and third tier at least.
If this is the case with a particular franchise in New Jersey, see how well the second tier is doing, as this is the middle-range or average range of franchisees. If that group is not doing particularly well with this opportunity, the person should certainly consider another business to invest into.
Do Franchisors Blame the Franchisees for Poor Results?
If the franchisors are blaming the franchisees for lackluster results, this is another warning sign to stay from that particular franchise business opportunity. If the franchisees are the reason behind poor results, this speaks badly of the franchisors because they are not recruiting properly when they know the business model. The whole system could be flawed as a result, which is why it is likely not a good investment.
Does the Business Model Keep Changing?
If the company in New Jersey continues to change the business model, this can indicate that the whole concept does not work. Investing in this opportunity could lead to a loss of capital and no business to speak of.
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