Picking a great franchise can be tricky. If you go by brand name alone, you might risk underlying financial instability. If you only look at the numbers, you could get a poor deal when it comes to your franchise relationship. Make a careless mistake, and you could even fall victim to a shady or scam franchise! Careful research into every franchise option is key to making a good decision. Start by looking for these signs, information that indicate a strong, stable franchise you can put your trust in.

1. A Strong ROI:

Franchise Return on Investment can be tricky, because there are many inputs from different players and the business is constantly dynamic, subject to change. In general, you should examine the capital it would take to invest in the franchise and ensure you will get around a 15 percent annual return on your money. This general rule helps with many, but franchise consultants often remind buyers that their time is also a key investment.

2. A Challenging Approval Process:

At first glance, as a buyer you may want an easy approval process when qualifying to buy the franchise. But a rigorous approval system that you must work to meet and market yourself to is a sign that a franchise wants its business in good hands. It is also a sign that the franchise knows what it is doing and has a history of placing its business in the hands of very qualified people. This an excellent sign of a company that knows what it is doing.

3. An Excellent Territory:

Carefully examine the territory that you will be given. Where is it, and how big is it? How do territory rules work for this franchise? You want a territory that is located in an ideal spot without too many competitors, but you also want the franchise to play fair. Territory contracts should be clear and easy to follow, with a guarantee of a certain pool of customers.

4. A Supply of Marketing Materials:

Marketing materials tell you two things. First, they show that the franchisor is willing to invest in you to help you succeed, and does not want you to shoulder too many costs when setting up shop. Second, it shows you that the franchisor has a strong marketing budget and a dedicated operation at the headquarters that can successfully produce materials for the entire chain – a sign of a robust company that knows how to budget for the right kinds of expenses.

5. A Lack of Litigation Problems:

The litigation history of a franchise should be public knowledge. A quick search will show you if your franchise choice has a history of litigation. Some lawsuits are to be expected, but a high frequency of suits is a danger sign. A strong company will have relatively few lawsuits, and they will be the right kind of suits – nitpicking issues with competitors or disgruntled

Lauren Thomas is a professional blogger that provides information on getting started in investing and buying a franchise. She writes for BeTheBoss, where you can find the top franchise opportunities in Canada.