So you’ve decided that you want to buy a franchise. You’ve done a few Google searches, read a few magazines or blog posts and now you want in.

At this stage you have short-listed a few potential suitors and you’ve zeroed in on their requirements: you know what uniform you might need to wear, how many hours you’re expected to work and the usual locations of the franchises.

In spite of all this preparation and due-diligence you have done you still don’t know the answer to the most pressing question of all: will your franchise business make money? No franchise business, no matter how glorious or prosperous its track record might be, can offer guaranteed financial success.

But there are things to consider and pay close attention to when buying a franchise as a new franchisee or as an existing franchisee before you sign on the dotted line.

Know yourself and seek expert advice

Because a franchisor can’t guarantee financial success you need to choose a franchise that suits your skillset best – this is the most important point when pondering your potential franchise success. You will not, under any circumstances, make money in a business that you don’t like or lack the skillset in just because it’s – quote un-quote – successful.

National head of Mills Oakley Lawyers franchising team Warren Scott says that there are many things potential franchisees should consider when in the buying phase that should be run past experts for their advice and professional opinion.

“There are many elements for potential franchisees to evaluate when buying a franchise business.  They should assess the financials and prepare a business plan, consider location of the business and how other similar businesses are performing in the area as well as the strength of the franchise network.

“The franchise agreement and lease (if there is a premises) are important long term agreements that need to be carefully reviewed with expert advice. Fit-out and refurbishment obligations can be particularly expensive so particular attention should be paid to these,” Scott says.

Evaluate risk

In order to make money as a franchisee – or to put yourself in the best position to do so – you need to evaluate all potential risks associated with the franchise business.

Doing research and risk assessing goes far beyond reading company PR, website copy and driving past the local success story. Potential franchisees are urged to familiarise themselves with all sorts of information that outlines the track record of the business, which requires some digging and thorough research.

“In my opinion, well-established and large franchise networks afford the best opportunity for franchisees to obtain a large sample of historical data about how the business has performed over multiple locations.

“While this is no guarantee of performance of any particular franchise in a particular location in the future, the access to that information can provide some comfort to franchisees in developing their business plan for the business they plan to purchase,” Scott says.

In many situations where there’s risk there’s reward, and the two are usually found together. It’s up to the franchisee to choose the best business (and personal) scenario for their financial prosperity because there is only so much a franchisor can do to help ignite success.

“Often the best opportunities to maximise financial performance come with taking additional risk. New, small or growing franchise networks have many stories of those getting in early being the ones to profit most,” Scott says.

Do homework and pay attention to the business side of things

Generally, franchisees will be happy if they’re financially successful but money isn’t everything. It’s key for franchisees to align their skillset with their passion, otherwise success will be hard to come by. Business acumen is key – without question.

Director of the Franchise Advisory Centre Jason Gehrke says that franchisees should be looking at the capacity of a franchise business’s cash flow and potential future cash flow. It’s not a matter of seeing and believing a franchise’s success, rather a matter of doing due diligence and making sense of the numbers yourself as if to ensure it’s a business worth buying.

“Franchisees should be looking at the business capacity to generate cash – and future cash flows. This will have a significant impact on the amount of working capital required. If a franchisee goes into small business without enough working capital they are at great risk of compromising their future success, struggling or failing very early,” Gehrke says.

Thorough due-diligence can’t be stressed enough

Gehrke explains that potential franchisees or current franchisees – who are looking to buy or expand their business portfolio – should do thorough due diligence. But what constitutes as thorough, and what steps should be taken? There are a few points that are not to be avoided, he suggests.

“The obvious thing franchisees miss is feedback from current franchisees but a less obvious one is the proportion of existing outlets in the network which are currently up for sale. If there is a high proportion in excess of 15-20 percent, that does indicate concerns within the profitability of the model or dissatisfaction of franchisees,” Gehrke says.

Making more money as a franchisee isn’t an easy task, but it’s achievable if franchisees do their homework and have business acumen. Financial success in business doesn’t just merely happen – money needs to come in and the money that leaves can’t out-weigh profits.

“Go and spend some time working in a franchise to see what the lifestyle is in operating a franchise, which is fully consistent with the business. Spend an hour of your time undertaking in due diligence if you’re spending $1000 – that is my advice to potential franchisees. If you’re investing $100,000 you should invest 100 hours in due diligence.

“People often have misconceptions about how to make money out of business; it is very, very simple because there are only two ways: profits on the way through and capital gain on the way out. It is very simple.

“Of those two things the only one that franchisee can really influence is the profits on the way through – so capital gain is dependent on external factors profitability, however, is more capable of being influences by franchisee. Focus on being profitable from early as possible,” Gehrke says.