Seid: Smaller franchisors can't afford to let the first couple of franchisees fail, so they tend to get very personalized and over-serviced. That's good and bad--more good for the franchisee. A [smaller] franchisor may be struggling with critical-mass issues and be unable to [offer] TV advertising or proper brand advertising, so it really depends.

You have to look at whether management is entrepreneurial enough to stay ahead of the curve, especially when dealing with a technology-related product.

If I, as the franchisee, am buying something for $1 and the franchisor can buy it for 50 cents and sell it to me for 75 cents, I'm thrilled--as long as they're not losing the ability to get me the lowest price by having fewer vendors.

Franchisees are not entrepreneurs. They're entrepreneurlites at best. An entrepreneur wants to chart his own course. Franchisees have to follow a set of rules, and they cannot violate a franchisor's brand. If you have to have things your way or think the franchisor's product needs to be improved or changed, you should start your own business.

Ask "Are there any zoning requirements? Do I need a van? What kinds of deliveries are coming in? Are customers coming to my house?"

There's an anonymity over the telephone. Call and be very respectful. Say, "Hi, I'm looking to buy a franchise. Is now a good time to talk?" Call those who have left the system in the past year. Most of them are unhappy--you'll find out why.

The franchisor reserves the right to place a competing unit in a location regardless of the impact that will have on existing franchisees' sales, profits and incomes. When you join a franchise, you should have an expectation of reasonable impact. Factor into your business plan how your business will be affected by a first and then a second location near you, typically taking 10 percent and 5 percent of your sales.

"When was the last time you did consumer research? Who did it? What were the results? What have you done to improve your product?"

Check for psychological and personality testing, serious questions about background and qualifications. And talk to other franchisees--if they're not up to your standards, get into a system where they are.

Franchise salespeople are gifted. They play into your ego, drive, future and beliefs. You need an advisor. I send people to lawyers [I trust], because they'll dispassionately look at a franchise and say, "This is crap."

When a franchisor is looking to go public and increase the value of its company, it [sometimes] engages in aggressive sales tactics by mispresenting the average unit sales volumes in order to seduce new franchisees. . . . [Sometimes, a franchisor] will bend the rules when it finds someone ready to put money down to open new units, even though that person may not be financially qualified.

Ask the franchisor what results they're seeing in their advertising. If they're not measuring results, get up and run--they're amateurs. Ask them how much of the advertising dollars are spent on nonmarketing functions. Most franchise agreements allow the franchisor to spend [advertising] money on administrative costs, which can include the salary of the marketing person up to 18 percent. It can also pay for overhead.