1. “Package” or “product”? Most franchises are “package franchises” — businesses such as fast-food restaurants, muffler shops, or motels that come complete with a business model laid out by the parent company. “Product franchises” include car dealerships and gas stations that exist mainly to distribute the parent company’s goods. Owners of product franchises have more control over the way they run their businesses.
2. How many franchises does the organization have? A large number of franchises indicates a successful, established business. Be careful, though, if a firm’s other franchises are located near yours, you could wind up competing with a nearly identical business.
3. How much is the franchise fee? A 1996 study by the International Franchise Association showed that 95 percent of franchise fees were less than $40,000. But you might pay much more for a franchise affiliated with a blue-chip national chain.