Is owning a franchise a fruitful venture?

For many entrepreneurs purchasing a franchise is less intimidating than starting a new business.

After all, you're buying into an already established concept.

But with literally thousands of franchises to choose from, picking the right franchise to invest your money in can be challenging. Given today's tight economic climate, franchisees have to be even more judicious, say experts.

"Making the right initial choice of a franchise is 95 percent of the success recipe," says Mary Tomzack, founder of Manhattan-based Franchise

Help.com and author of "Tips and Traps When Buying a Franchise" (Source Book Publications; $19.95).

You can't just jump into any franchise, she notes. Assessing a franchiser takes time. Here are some tips on getting started:

Dig deep.  Before purchasing a franchise do some soul searching, says Tomzack. Try narrowing down your search to three or four franchise systems you might be interested in, she suggests. Consider whether you want to go into a service business, home-based or products business, she says. Do some Internet research to find out more about your potential candidates, notes Tomzack. Sites like Franchise

Help.com and Franchise.com can offer insight.

Get the FDD. The franchise disclosure document is one of the most important documents you can get on any franchiser, says Harold Kestenbaum, a partner in the law firm of Gordon & Rees in East Meadow and co-author of "So You Want to Franchise Your Business (Entrepreneur Press; $19.95). It includes financials (i.e. three years of audited financial statements unless it's a start-up), litigation, fees and costs, he notes. You can ask for an FDD, but the franchiser doesn't have to provide it until 14 days before signing a franchise agreement with the franchisee, he notes. Alternatively, you can request the document via a Freedom of Information Act from the New York State Department of Law or purchase one through various websites including FranchiseHelp.com, he notes.

Look for red flags. When looking at financials, pay attention to such items as net worth and cash at hand on the balance sheet, suggests Kestenbaum. "If it's got a substantial negative net worth, then you have to say, 'Is the company solvent?' " he notes, advising that your accountant review the document. Also look at the frequency of units opened, says Jason Rager, author of the "Franchise Insider's Guide" (Jason Rager Publications; $97) and founder of Winter Park, Fla.-based Franchise Analyzer, a provider of software that helps people evaluate franchise opportunities. Be careful of overexpansion and whether the brand can support it, says Rager, who offers more tips at bizquest.com.

Assess fees carefully. There are numerous fees that come with purchasing a franchise, including the initial investment, royalty fees (a percentage of the franchisee's gross revenue), build-out fees if it requires a site location, and advertising and marketing fees, says Rager. Look at all these costs to see if the franchise makes financial sense, he notes.

Assess willingness to negotiate: Don't be afraid to negotiate a better deal. Edwing Saint Laurent, owner of FruitFlowers in Nesconset, which makes fruit and vegetable platters and bouquets, did that when he bought into the franchise in 2007. After speaking with, and researching, several different franchisers, he found FruitFlowers was willing to negotiate a wider territory -- all of Suffolk County -- for a more competitive price rather than limit him to individual ZIP codes. He plans to open additional locations in the next two years.

Talk to franchisees. You won't get a true picture of the franchiser unless you talk to other franchisees, says Tomzack. Saint Laurent did that when he was researching potential franchise systems and even visited several sites in Florida and Pennsylvania. "You have to be careful," cautions the former banking operations manager.

FAST FACT
2.5 percent. The percentage by which U.S. franchise establishments are expected to grow in 2011, from an estimated 765,723 to 784,802, according to a report prepared for the International Franchise Association by PricewaterhouseCoopers.