The starting point for analyzing a franchise offering is to obtain the offering circular. There is a federal offering circular format suggested by the Federal Trade Commission. However, there is no federal registration requirement, so each franchisor may not have this offering circular.
Many states require a similar document. Franchisors must supply the state (or federal in lieu of the state offering) to anyone who asks for it. Typical items included are: initial fees, ongoing royalties and advertising fees, how advertising pools are governed, what supplies you must purchase through the franchisor (to assure quality control, and thus protect your investment from other sloppy franchisees who might bring down the value for others), list of legal disputes, franchisor financial statements, and officers of the franchisor.

You should check on several things. Ask your accountant to review the franchisor's financial statements to determine if it is strong enough to supply the level of support it is promising. Also, call several franchisees (both current and former) to see what they think of the organization, but don't call only the people the franchisor suggests. In fact, ask the franchisor for the names and phone numbers of several people who are unhappy or have left.

Sample questions for franchisees might be:

	Are you happy with your franchise investment and its earnings? Why?
	Has the franchisor come through for you? Were you disappointed with any aspect of your entry into this business?
	Were you well trained for the challenges of this business?
	Have you had any problems with the delivery of services or obtaining prompt support from the franchisor?
	How much do you spend on local advertising in addition to the franchise advertising pools?
	Who do you perceive your competition to be? What strengths do you feel this franchise offers you to beat the competition?
	How did the company help you during the first few months obtain revenue?
	Are you making the profit you thought you would be, and is the growth rate what you expected? In your experience, how long do you feel it would take the average franchisee to reach a net profit of $50,000? $100,000?
	How did you finance the business? How much and how long did it take you to reach breakeven?
	If you had the opportunity, knowing what you know now, would you make this investment again?

You should be conscious of the fact that there is still very little regulation of franchisors. It is still very much a "buyer beware" situation, as with any business purchase. An offering circular does not indicate any government approval or even scrutiny of the opportunity. Check out the offering and the franchise legal documents with your accountant and lawyer.