When purchasing a franchise, many entrepreneurs-to-be are excited by the fact that they have an excellent weapon in the fight against competitors. When the resources of an entire franchise are arrayed against other companies, small business owners can be confident that their stores and offices can succeed where others may have failed. Franchisors provide a great deal of brand power and marketing materials, so there is more time for franchisees to concentrate on their own stores.

However, one problem with this model that must be considered is the activities of fellow entrepreneurs within the same organization. The double-edged sword that comes with owning a franchise is that while a franchisee may have to expend less effort contending with other groups, the people within his own "family" can possibly siphon away some of his business. Consider the following guidelines for ensuring that this doesn't happen.

Natural geography
When selecting a franchise, one of the most important considerations should be the geographic location in which it exists and exerts an influence. It is easier in some places rather than others to figure out how the dispersion of people in an area will do business with local companies. Natural boundaries such as town lines, mountains and highways can affect how far people are willing to travel for different products and services, so it is best to choose a location that is bounded by these things.

Franchise agreements
The beauty of investing in a franchise is that the franchisor will often grant a contract that has been carefully selected to optimize geographic conditions. It does the franchisor no good to have multiple locations that are draining each other's business. That's why most franchise agreements set in stone the limits beyond which different stores and offices cannot compete. Be sure to understand these boundaries when signing any agreement. It is also important to understand the protocols to follow when it seems as if a fellow member of the franchise "family" is stepping outside of the lines that were set forth by the franchisor.

Open competition
In some cases, it may be necessary to actually compete with another franchise in the same company. Of course, there's no way to do this overtly. Essentially, all that a small business owner can do is to provide a high level of service that will put other stores to shame. In this way, a franchise is not explicitly violating the conditions of a franchise agreement. However, there may be consumers who prefer one location of the same company over another simply because it's cleaner, has a friendlier staff or is better decorated.

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.