Before signing documents on a franchise opportunity, entrepreneurs should be prepared to be interviewed and conduct their own investigations into the company and its subsidiaries. Armed with as much knowledge as possible, entering the franchise business can be a lucrative and secure means of starting a business.

Be prepared to answer questions about personal and past business finances as well as management and employment history. Franchisors need to know if a potential franchisee will maintain a strong, profitable branch of the company and uphold the image and service standards established throughout the franchise's operations. Although giving up personal information may feel like an invasion of privacy, a strong franchise should be picky and learn as much about interested investors as possible. Franchisors that don't ask many questions or look for proof of financial stability may be too quick to establish new branches and dilute the strength of the brand.

Carefully review the franchise disclosure document before meeting with a company representative to determine what to ask. If the startup costs aren't clear or financing options aren't explained, make a point to determine exact details - fees on services such as insurance, royalty, advertising and training should be obviously laid out.

Company details like financial and legal histories should be included on the disclosure document, but asking about how unfortunate situations have been handled will offer a better impression of the franchisor's business practices and ability to handle setbacks.

Certain parts of the disclosure document may need clarifying, such as territorial restrictions. Entrepreneurs may be more familiar with their local area than national franchise brands, so if any questions arise as to why a territory has certain borders or how future branches will affect existing ones, be prepared with as much local information as possible.

Before interviewing the company's current franchisees, ask the franchise about its history with disputes and terminations. Not only will the company representative offer a broader picture than can be determined through one-on-one discussions, but a striking discrepancy between the opinion of branch owners and headquarters signals possibly dishonest business practices or a lack of communication with franchisees.

Interviewing existing franchisees can be easy, as they're listed on the disclosure document. Obtain opinions on the overall strength of operations, continuing assistance and training and the viability of the industry. While local branches may view interested entrepreneurs as potential competition, they will know the area market well and how well a new division would do in the current economy.

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.