Many people mistakenly assume that the franchise fee is the only cost they will have to pay when starting their new business. In reality the costs involved in buying a franchise are much more than just the original payment.

In addition you have to pay a service charge or royalty payments, and in some cases both! These can severely dent the potential profitability of the business model.

It would be great if the charges stopped here but in many cases they do not. There are hidden charges to consider as well. Some franchises insist that you buy all your raw materials from them or a chosen supplier. Now why would they do that? Often you will find that you can source the raw materials cheaper yourself but then you will be in breach of your contract if you choose to do so.

Another major limitation of buying a franchise is that you will be restricted to doing business in the territory you have purchased. Compare this to starting a business on your own. No such restrictions apply in this scenario.

One major gripe that many franchisees have is that they are unable to use their own initiative and take the business in the direction that is most suitable for their target market. Every local area has its own unique identity and often the "one size fits all" might not work in your chosen area.

Finally make sure that your chosen franchiser is well funded and has the financial ability to stay the course. There have been cases of people buying into a franchise just at the point when the franchiser was heading towards bankruptcy!

If after all your investigations you are still persuaded to buy a franchise, make sure you take proper legal advice and ask your accountant to examine the financial forecasts carefully before you sign the franchise agreement or hand over any money.