When investing in a franchise, several factors must be considered. One of the most important steps to take, and on the forefront of an entrepreneur's mind, is the profitability of a potential franchise opportunity.

The U.S. Federal Trade Commission mandates that franchisors must provide detailed income projections when profitability is part of the company's marketing or claims of success for potential franchisees. Be wary of businesses that refuse to give evidence of franchisee successes and the brand's overall financial state - a legitimate, stable business should have the information on hand and be ready to share it. Important income projections to consider include franchisee incomes and sales figures.

The franchise disclosure document is another important statement that must be provided to potential franchisees. Sometimes called the franchise offering circular, the document explains the business' history and practices in detail.

Choosing a franchise means committing to a brand and a way of conducting business. Carefully consider the style of management expected by the franchise, the kind of image it projects and the nature of the company's policies and marketing. An entrepreneur who sets out to start a small business opportunity that doesn't fit her personality or mesh with her business ethics may not be as successful as possible. Owning a franchise branch is a job, and most people aren't capable of performing at 100 percent for a job they don't like.

The disclosure document will also provide the franchise's financial and legal history, as well as its experience with current and past franchisees. This information provides a view into the soundness of the company's future and the ease with which other investors have turned a profit (or dealt with the headquarters). Also take note of the length of time the company has been in business.

Restrictions are another factor to consider when choosing between multiple opportunities. Find out how much control franchisees are given over stock choice and suppliers and how territory is controlled by the franchise. While a strict restriction on location and range of business can limit potential profits, a lack of geographic constraints can result in competing branches of the same brand within close proximity or a flooded market in a particular area.

Most of the necessary information to examine and choose a franchise is in the disclosure document, but ask questions if numbers don't add up or the document doesn't seem to provide the full picture.

About Liberty Tax Service

Liberty Tax Service is the fastest-growing retail tax preparation company in the industry's history. Founded in 1997 by CEO John T. Hewitt, a pioneer in the tax industry, Liberty Tax Service has prepared over 8,000,000 individual income tax returns. With 42 years of tax industry experience, Hewitt stands as the most experienced CEO in the tax preparation business, having also founded Jackson Hewitt Tax Service.

Liberty Tax Service is the only tax franchise on the Forbes "Top 20 Franchises to Start," and ranks #1 of the tax franchises on the Entrepreneur "Franchise 500." Each office provides computerized income tax preparation, electronic filing, and online filing through eSmart Tax.