Too good to be true: Is the franchisor pressuring you? Making claims of massive profits and that you'll easily become a millionaire? Calling and e-mailing you constantly? If so, then you need to be careful. Unfortunately, there are many fly-by-night franchise operations.

Read the franchise agreement: Granted, who wants to read complex agreements? But you need to (below, I have some books you can use to help out on this). You should also have an attorney review the agreement.

But aren't these agreements nonnegotiable? This is not true. In fact, it is quite common to make adjustments to franchise agreements.

True, there are certain parts that are usually off-limits, such as royalty rates and the business methods. However, you can try to make changes in areas such as how much territory is protected, your ability to transfer the franchise to another party, the terms when the contract is renewed, and cures for defaults.

Next, get a copy of the franchise's Franchise Disclosure Document. Mandated by the Federal Trade Commission, this document will have key disclosures on: the backgrounds of executives of the franchise, the litigation problems, and the audited financial statements. Has the operation been growing and making profits? Or is it running out of money?

Get experience: Before making the plunge, you might want to work as an employee for a franchise. Do you like the business? See some opportunities? How much time does it take to run things? How much money is the place taking in?

At the same time, interview franchise owners. No doubt, this can be a great source of information. Actually, you can usually see if the owner is frustrated or pleased with the franchise.

Some questions to ask: How good is the franchise training? Are you getting enough support? Would you do this again?

Resources: There are some excellent books on franchises to consider, including Franchise Times Guide to Selecting, Buying & Owning a Franchise and The Franchise Handbook: A Complete Guide to All Aspects of Buying Selling or Investing in a Franchise.

Tom Taulli provides a variety of financial services to business owners, such as business plans, cash flow management, and taxes. You can reach him at taulli.com.