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David had $75,000 in liquid capital and found a franchise with a $65,000 initial investment. It seemed like perfect math. Eighteen months later, he was forced to close after running out of working capital. His mistake? He confused the franchise fee with the total investment needed and failed to build a realistic pro forma that accounted for the actual costs of running a business.

Tom spent three weeks calling franchisees before investing in what seemed like a "sure thing" food franchise. Every person he spoke with was enthusiastic and profitable. Six months after opening, he discovered he'd been given a carefully curated list of the franchisor's top performers—not a representative sample. His location struggled from day one, and he later learned that 40% of franchisees in his region were barely breaking even.

When Sarah first discovered the franchise opportunity that seemed perfect for her entrepreneurial dreams, she was ready to sign on the dotted line within weeks. Like many first-time franchise buyers, she was eager to get started and didn't want to "waste money" on legal fees. That decision cost her over $150,000 and two years of her life.