No one wants to invest in a franchise opportunity that is going to go under in the next year or two - in fact, even a franchise system that remains stagnant may not be the most attractive investment for ambitious businesspeople. As such, there are a few ways that prospective franchisees can judge whether a franchise is "hot."

The economic recession hit every industry hard, and franchisors were no different. Entrepreneur magazine cites a study from PricewaterhouseCoopers for the International Franchise Association that found that between 2008 and 2009, franchise units dropped by 4 percent, compared to the 2001 to 2008 period when they grew by 40 percent.

Yet, that doesn't mean that all franchisors have been similarly affected. In fact, many have experienced astounding growth in what the magazine calls a "cold market." To do so, these franchisors have one of two properties: a powerful brand or a "compelling" value proposition, Entrepreneur explains.

"Being part of a brand with virtually 100 percent top of mind awareness with consumers gives potential buyers confidence and security," the source explains. "Without a famous brand name to rely on, however, a franchise company desiring rapid growth in today's market must have the numbers on their side - in a big way."

There are three factors that can help prospective franchisees decide whether a franchisor without immediate name recognition has the required elements to offer them financial security and future growth opportunities.

First, prospective franchisees will be looking for systems with lower investment levels. As a result of the recession, this has become a crucial factor, seeing as financing a business, especially through traditional means, has become next to impossible for many business owners. Now, Entrepreneur notes, most rapid growth franchises should require a total investment of no more than $125,000.

Furthermore, franchisees should break even quickly. "In today's market, buyers are looking for a much quicker path to profits. They simply don't want to be in the position of having to feed additional cash into a new business to cover operating deficits for any significant length of time," the magazine writes.

Finally, prospective franchisees should also examine a business' profit margins. This information can be found in the Franchise Disclosure Document, which franchisors are bound to provide interested individuals with, and should show profits that are 15 cents to 10 cents on every dollar, Entrepreneur explains.

However, money isn't everything. Interested franchisees should meet with the franchisor and current franchisees to get a feeling for the corporate culture.

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