Do Your Homework
    If you are considering opening a drop-off store...

If you are considering opening a drop-off store I want you to do five things
before you pay out any money:

    (1) Ask eBay why they haven’t started their own drop-off stores or
    bought one of the chains.

    (2) Talk to several owners who have been in business over six months.
    Ask about the number and type of items that people bring in to sell.

    (3) Ask to see the owner's P&L. Does it show money going to pay back
    the startup cash or loan, and income for the owner?

    (4) Find store owners who have closed or sold out and ask if they would
    recommend the concept to anyone.

    (5) Read our legal page
The following advise is taken from an article by Jeff Elgin:
Buying a Franchise: Interviewing Existing Franchisees

When investigating a franchise, don't forget to speak with franchisees already
in the system to get the real scoop.

November 01, 2004

Earnings. It's critical that you have a strong sense of just where the average
unit is in terms of earnings and how long it took to get to this point. By the
time you finish your franchisee contacts, you should know the answers to the
following questions: How much money does the typical unit make, given a
specified length of time in business? How soon does a typical unit start
making money after opening? What is the range of answers for these
questions? If you are simply not able to determine these answers to your
satisfaction in your research, do not settle. This is a huge red flag, and you
need to tell the franchise company that such a lack of information will cause
you to decline the franchise if they can't help you get the answers you need.

Ex-Franchisees. Any franchisee who left the system in the past year has to
be disclosed in the UFOC. It is sometimes helpful to call people in this category
just to see why they left. The answers won't necessarily be negative, but if
they left because it was a bad experience, spend some time asking them
about the reasons they felt the opportunity wasn't right for them. As you
compare and contrast these conversations with those you've had with
existing franchisees who are happy, you may get insight that will help you
determine if there is a key ingredient for success. You can then use this
insight to help you determine if this is the right franchise for you.

As a final piece of advice, it's always a good idea to bring up the subject of
earnings as the last topic in your franchisee visits. Most people are reluctant
to discuss their income with strangers, and you'll find the franchisees are
more willing to cover this subject after you have spent some time visiting with
them. At that point they know you're not a competitor trying to get
information, but rather, a serious prospective franchisee who needs the
information to proceed. They were all in your position at some point, so they
should be willing to help you once you've established some rapport with them.

For the entire article click  here: Interviewing Existing Franchisee
"There are thousands of companies that distribute their products or services
by franchising and there are directories which list them. If you receive a “kit”
(of promotional literature and/or an offering circular) from a franchisor in
response to an inquiry, read it carefully, but do not limit yourself to doing so.
The purpose of your investigation should be to determine whether a
franchisor is experienced, successful, strong financially with solid
management, and reputable in its business area. Such characteristics are vital
to any success you may hope to achieve.

Moreover, if you will require financing and must find it yourself, the franchisor’
s reputation, credit rating, and track record (as well as its contract), may be
vital considerations in your ability to obtain such financing."

INVESTIGATE BEFORE INVESTING
Guidance for Prospective Franchisees
By Lewis G. Rudnick,Rudnick & Wolfe,Chicago, Illinois
and
H. Bret Lowell,Brownstein Zeidman and Lore,Washington, D.C.
© 2006-2008 eCential
Group, LLC