Franchise Red Flags

ItsyourturnYou’re dreaming you heard about a hot “Product X” franchise opportunity. You see your future and follow your gut instinct.

In the dream, you’re a freshly minted franchisee, standing proudly in front of your new business beneath beautiful, crimson banners.

In their post, the experts at suggest that, if you’re dreaming of franchising, it’s time to wake up to certain actual red flags.

Given the strong presence Sintel Systems has in the retail, restaurant and service industries’ point of sale marketplace, we share articles and commentary with our customers and franchise hopefuls looking for key insights and opportunities in order to help them make the best decisions from the very beginning.

In the post “Red Flags For Potential Franchisees,” talked with Jeff Lefler, CEO of Franchise Grade, a company that provides franchise investors the opportunity to grade three comparative franchise systems as part of their due diligence. Lefler has 15 years of small business experience, 10 of those in franchising, and he shared some red flags he says potential franchisees should be on the lookout for:

Communication Restrictions Or Lack Of Transparency 

“The best asset you can get is to actually talk to other franchisees,” says Lefler. “If they’re not allowed to share their business experience, not the proprietary workings of the franchise but just general questions, that’s a red flag.” Lefler explains, “Things like how they like the franchise system, are they making money or are they satisfied, if they can’t answer those basic questions obviously that raises concerns.”

Reluctance From A Franchisee To Repeat The Experience

Lefler says to make sure you ask as many franchisees as possible these questions:

– Given what you know now, would you invest in this system again?

– Given what you know now, will you recommend this investment to your family and friends?”

Report Card on Franchisor Employees and Executives

Lefler believes that following the executive mindset can be critical to predicting the future or direction of the franchise. For any senior executive or vice president of franchise development, determine what was the executive’s past experience and chart if the system still growing, or did the system get better after they left in terms of money or franchisee satisfaction.

Social Media Sentiment

What kind of information do you find on Twitter, Facebook or Instagram? How are the online reviews about the brand? “For franchise systems or concepts, looking at reviews for one location isn’t necessarily valuable, unless you are buying that location,” Lefler says. If bad sentiments exist, “You’ll have to find out what’s creating all the negativity and the bad sentiments.”

Read the full post here.

For more insights into the franchise-seeking mindset, check out our related posts, The Baby Boomer Franchising BoomStart At the Top and Work Your Way Up, and Over The Hill Or King of It?

Before you make your franchise move, consider calling Sintel Systems for a free phone consultation to help weigh and understand your point of sale (POS) options. We serve as a franchise incubator for clients across the retail, restaurant and service industries, forming lasting partnerships with our clients that you simply can’t get from a reseller.

Sintel Systems is the only direct to end user full-service provider of tailored Point of Sale systems across retail, restaurant and service industries, including frozen yogurt shopspizzeriassushi restaurantscafés and retail stores.

As a single source for business solutions, our experienced, knowledgeable team negotiates the complex POS landscape for you to enable you to find the right POS system for your business and budget. Hardware – Software – Support

Questions or Comments: Contact us 855-POS-SALES

Leave a comment