Many prospective franchisees spend a long time searching for the right franchise. After exploring and evaluating different opportunities, they get close to making a final decision. They become excited at the prospect of finally finding one that really interests them.

Why do they decide to select this particular one? When all is said and done, the cost of fees, royalties, inventory, improvements and lease obligations could exceed $100,000. Things start to look good. A smart business person should step back and ask himself, "Are there any reasons not to go forward?"

Human nature being what it is, unfortunately, it all too often allows people to talk themselves into thinking that a business deal is a good one, even when all the facts point to the contrary. In those cases buyers see only the good things, totally ignoring the obvious bad points, which should tell them to move on to the next deal. They wear "rose-colored glasses" that make them vulnerable to a seller whose only interest is in closing the deal.

Buying a franchise, or any other kind of business, can fall into that category. Among those likely to be urging you to make the deal are:

All the other participants in this scenario get paid before the franchisee takes home a single penny. That being so, who protects the franchisee? The answer is, you have to protect yourself.

Do not accept representations at face value. Sales presentations are often made with "smoke and mirrors," gross exaggerations and/or distortions. Sometimes the "facts" cross over the line to actual misrepresentations.

Many franchisees have little or no prior entrepreneurial business experience before buying a franchise. In many cases first-time franchisees put up most or all of their savings and net worth to fund a simple business venture they have never done before. While that is a gutsy decision, it is not one to be made lightly.

The first thing a franchisee should do is engage an experienced accountant and an attorney well versed in business matters. The cost of doing so is more than justified by the extra level of protection you will get in return.

Some franchisors are prone to exaggerating how good their system is, or they may neglect to mention its problem areas. Likewise, most are unlikely to volunteer information about former franchisees who did not succeed. While government regulations require franchisors to disclose certain information, negative or potentially damaging information may be buried in the "fine print," where it takes a practiced eye to find it.

Read any franchise's offering circular in its entirety. Find a way to talk to those franchisees who are struggling or have left the system. Ask them what caused their problems. Many people have no reluctance discussing their business problems, especially with a prospective franchisee. True, they may have their own axe to grind, but it is important to listen to them as well as to successful franchisees referred by the franchisor. Look at the number of lawsuits filed against the franchisor. Get copies of the lawsuits and read them. What are the underlying problems? Why did a particular franchisee fail? Don't be shy about calling and asking them these questions.

Since even the best franchise system can fail if it faces too much competition, you should know who your competitors are and where they are located.

Read the local newspaper and see who is advertising similar businesses. Do any of them seem to be competitors? Speak to local commercial real estate brokers in the area where you plan to operate. Are they aware of any good locations for your type of business? What are the market rates?

Then ask if they are aware of any possible competitors for your type of business. Are there any other businesses in the area that could indirectly impact your franchise?

Go to all surrounding municipal or county building departments and find out what they require for you to construct your franchise tenant improvements. When you are there, ask if there are any new applications pending for franchises or other businesses similar to yours.

Do not shortchange your due-diligence process. Doing so could end up costing you dearly in both time and money.

Almost every new business experiences some setbacks, and most often they are totally unanticipated. Under-capitalization is the most common problem facing start-up ventures.

You will need money for many things, such as local advertising, payroll, rent and those unanticipated problems. Make sure you have sufficient financial resources to carry your new business through the difficult early stages.

A major challenge facing many franchisees today is the issue of territorial encroachment from within one's own franchise system. With prime locations already taken by older franchisees, some franchisors try to shoehorn new units into territories that may be questionable, at best, in terms of their ability to support new franchises.

Why would any new franchisee choose to open up a new franchise within a mile or two of an existing franchise in the same system? In some cases, people do just that-often, no doubt, as a result of those rose-colored glasses.

In the early days of franchising, it was commonplace to have territorial protection of three or more miles. Unfortunately, that is no longer the case. Some franchisors may negotiate some form of territorial protection. If so, make sure you get it in writing. Do not rely on verbal promises.

Does your intended franchise have a franchisee association? If so, it can be an invaluable source of information. Try to find out whether the association is a truly independent body, with its own leadership and a commitment to advancing the common interests of all its members.

If no association exists, find out whether the franchise agreement permits the franchisees to have an association. If not, that preclusion is a clear indication of how the franchisor is likely to react to dissent among its franchisees.

It is extremely difficult for a single voice to effectuate change in a system. It is important for franchisees to present a united front in support of their own interests and to further the ultimate goal of success shared by all parties to the franchise agreement.

If your franchise does not have an association, you should form one. Most franchisors are more receptive to adopting changed procedures when they are presented with a unified voice backed by a large number of franchisees.

Franchisors are in business to make money, just as franchisees are. However, good franchisors understand that their success cannot come at the expense of their franchisees. In its most effective form, the franchise relationship is a mutually beneficial one. A franchise system that appears to be built on an adversarial relationship model is one best avoided.

Franchising has helped thousands of people become successful business owners, but a franchise is not a guarantee of success. Franchise success requires a symbiotic relationship between the franchisor and the franchisee, and sometimes change may be required to achieve or maintain that success.

It is important to determine whether a franchisor is open to making needed changes before you buy a franchise. The best way to do that is through substantial and thorough due diligence. That is a key ingredient as to the ultimate wisdom of your financial decision.