<PAGE>
 
                                   FORM 10-Q
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549


[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the quarterly period ended  March 31, 1998
                                     -----------------------------------
                                      OR

[R]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the transition period from                   to
                                    -----------------    ----------------

     Commission file number  0-04781
                             -------

                              MARKET FACTS, INC.
     --------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)

           Delaware                                      36-2061602
-------------------------------                  ---------------------------
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                       Identification No.)

 
3040 West Salt Creek Lane, Arlington Heights, Illinois                60005
------------------------------------------------------              ----------
       (Address of principal executive offices)                     (Zip Code)
 
Registrant's telephone number, including area code        (847) 590-7000
                                                   ----------------------------
 
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. 
YES [X]  NO [_]

INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.

     8,842,308 common shares as of  May 7, 1998
--------------------------------------------------------------------
<PAGE>



                        PART I - FINANCIAL INFORMATION


Item 1. Financial Statements.


                      Market Facts, Inc. and Subsidiaries
                     Condensed Consolidated Balance Sheets
                  As of March 31, 1998 and December 31, 1997

<TABLE>
<CAPTION>

                                    Assets
                                    ------

                                                                            March 31,     December 31,
                                                                               1998            1997
                                                                          --------------  --------------
<S>                                                                       <C>             <C>
Current Assets:
  Cash  and cash equivalents                                               $ 19,738,496    $ 36,444,256
  Certificate of deposit                                                         50,000          50,000
     Accounts receivable:                                                                              
     Trade, less allowance for doubtful accounts of                                                    
     $1,167,443 in 1998 and $1,101,551 in 1997                               15,073,112      20,085,658
     Other                                                                       63,725          60,189
  Notes receivable                                                              180,759         188,844
  Revenues earned on contracts in progress                                                             
     in excess of billings                                                    7,750,625       4,618,736
  Deferred income taxes                                                       1,136,517       1,136,254
  Prepaid expenses and other assets                                             602,784         514,323 
--------------------------------------------------------------------------------------------------------
        Total Current Assets                                                 44,596,018      63,098,260
--------------------------------------------------------------------------------------------------------

Property, at cost                                                            32,648,265      30,356,209
  Less accumulated depreciation and amortization                            (14,034,614)    (13,274,711)
-------------------------------------------------------------------------------------------------------- 
        Net Property                                                         18,613,651      17,081,498
-------------------------------------------------------------------------------------------------------- 

Other Assets:
  Goodwill and other intangibles, net of accumulated amortization            
     of $300,751 in 1998 and $229,772 in 1997                                21,763,873       4,959,752 
  Deferred income taxes, noncurrent                                           1,156,093       1,063,833 
  Investment in affiliated companies                                            478,404         688,404  
--------------------------------------------------------------------------------------------------------
        Total Other Assets                                                   23,398,370       6,711,989
--------------------------------------------------------------------------------------------------------

        Total Assets                                                       $ 86,608,039   $  86,891,747
========================================================================================================
</TABLE> 

See accompanying notes to condensed consolidated financial statements.


<PAGE>
     

                      Market Facts, Inc. and Subsidiaries
                     Condensed Consolidated Balance Sheets
                  As of March 31, 1998 and December 31, 1997


                     Liabilities and Stockholders' Equity
                     ------------------------------------

<TABLE> 
<CAPTION> 
                                                                                 March 31,      December 31,
                                                                                    1998            1997
                                                                                ------------    ------------
<S>                                                                             <C>             <C> 
Current Liabilities:
 Accrued expenses                                                               $  8,681,822    $ 10,052,639
 Billings in excess of revenues earned
  on contracts in progress                                                         7,248,817       9,267,185
 Accounts payable                                                                  3,461,273       2,380,596
 Income taxes                                                                      1,202,193         945,449
 Current portion of obligations under capital leases                                 151,664         154,991
 Current portion of long-term debt                                                   136,546         136,546
------------------------------------------------------------------------------------------------------------
             Total Current Liabilities                                            20,882,315      22,937,406
------------------------------------------------------------------------------------------------------------

Long-Term Liabilities:
 Long-term debt                                                                   10,126,201      10,159,110
 Obligations under capital leases, noncurrent portion                                605,610         249,978
------------------------------------------------------------------------------------------------------------
             Total Long-Term Liabilities                                          10,731,811      10,409,088
------------------------------------------------------------------------------------------------------------
             Total Liabilities                                                    31,614,126      33,346,494
------------------------------------------------------------------------------------------------------------

Stockholders' Equity:
 Preferred stock, no par value; 500,000 shares authorized;
  Series A - none issued; Series B - 100 shares issue                                     --              --
 Common stock, $1 par value; 15,000,000 shares authorized; 10,880,858 shares
   issued as of March 31, 1998 and 10,875,258 as of December 31, 1997             10,880,858      10,875,258
 Capital in excess of par value                                                   44,726,050      44,707,038
 Cumulative foreign currency translation                                            (122,882)       (133,632)
 Retained earnings                                                                14,063,567      12,672,160
------------------------------------------------------------------------------------------------------------
                                                                                  69,547,593      68,120,824

 Less 2,042,550 shares of treasury common stock at cost                          (13,891,966)    (13,891,966)
 Less other transactions involving common stock                                     (661,714)       (683,605)
------------------------------------------------------------------------------------------------------------
             Total Stockholders' Equity                                           54,993,913      53,545,253
------------------------------------------------------------------------------------------------------------
             Total Liabilities and Stockholders' Equity                         $ 86,608,039    $ 86,891,747
============================================================================================================
</TABLE> 

See accompanying notes to condensed consolidated financial statements.

                                    Page 2
<PAGE>
     
                      Market Facts, Inc. and Subsidiaries
                 Condensed Consolidated Statements of Earnings
              For The Three Months Ended March 31, 1998 and 1997

<TABLE> 
<CAPTION> 
                                                                          Three Months Ended March 31,
                                                                          ----------------------------
                                                                             1998             1997
                                                                          -----------      -----------
<S>                                                                       <C>              <C> 
Revenue                                                                   $29,245,281      $21,581,422
------------------------------------------------------------------------------------------------------
Direct Costs:
 Payroll                                                                    5,342,539        4,038,070
 Other expenses                                                            11,254,038        7,812,798
------------------------------------------------------------------------------------------------------
   Total                                                                   16,596,577       11,850,868
------------------------------------------------------------------------------------------------------
   Gross Margin                                                            12,648,704        9,730,554
------------------------------------------------------------------------------------------------------
Operating Expenses:
 Selling                                                                    1,131,678          736,487
 General and administrative                                                 8,837,614        7,039,525
 Contributions to profit sharing and employee stock ownership plans           312,325          257,046
------------------------------------------------------------------------------------------------------
   Total                                                                   10,281,617        8,033,058
------------------------------------------------------------------------------------------------------
   Income from Operations                                                   2,367,087        1,697,496
------------------------------------------------------------------------------------------------------
Other Income (Expense):
 Interest expense                                                            (281,262)        (278,400)
 Interest income                                                              331,537           22,449
 Other income, net                                                             10,823           13,518
------------------------------------------------------------------------------------------------------
   Total                                                                       61,098         (242,433)
------------------------------------------------------------------------------------------------------
Income Before Provision For Income Taxes                                    2,428,185        1,455,063
Provision For Income Taxes                                                  1,036,778          620,441
------------------------------------------------------------------------------------------------------
Net Income                                                                $ 1,391,407      $   834,622
======================================================================================================
Basic Earnings Per Share                                                  $       .16      $       .12
======================================================================================================
Diluted Earnings Per Share                                                $       .15      $       .12
======================================================================================================
</TABLE> 

See accompanying notes to condensed consolidated financial statements.

                                    Page 3
<PAGE>
 
                      Market Facts, Inc. and Subsidiaries
                Condensed Consolidated Statements of Cash Flows
              For The Three Months Ended March 31, 1998 and 1997

<TABLE> 
<CAPTION> 
                                                                                 Three Months Ended March 31,
                                                                                 ----------------------------
                                                                                      1998           1997
                                                                                 --------------   -----------
<S>                                                                              <C>              <C> 
Cash Flows From Operating Activities:
 Net income                                                                      $  1,391,407     $   834,622
 Adjustments to reconcile net income to net cash provided by
 operating activities:
  Depreciation and amortization                                                       821,131         907,626
  Deferred income taxes                                                               (92,049)             --
  Vesting of restricted stock and demand notes receivable                              13,858          13,858
  Change in assets and liabilities:
   Accounts receivable                                                              5,667,469       2,697,944
   Prepaid expenses and other assets                                                  (11,734)        (74,962)
   Billings in excess of (less than) revenues earned on contracts in progress      (5,736,615)         25,378
   Accounts payable and accrued expenses                                           (1,442,214)     (1,928,185)
   Income taxes                                                                       256,768          39,916
-------------------------------------------------------------------------------------------------------------
    Net cash provided by operating activities                                         868,021       2,516,197
-------------------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities:
 Acquisition of businesses, net of acquired cash                                  (15,591,392)             --
 Purchases of property                                                             (1,789,530)       (609,189)
 Proceeds from notes receivable                                                        16,118          83,209
-------------------------------------------------------------------------------------------------------------
    Net cash used in investing activities                                         (17,364,804)       (525,980)
-------------------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
 Repayment of short-term borrowings                                                (1,205,864)     (3,791,162)
 Proceeds from short-term borrowings                                                1,055,864       2,826,369
 Reduction of obligations under capital leases and long-term debt                     (85,515)       (314,699)
 Proceeds from exercise of stock options                                               24,612              --
-------------------------------------------------------------------------------------------------------------
    Net cash used in financing activities                                            (210,903)     (1,279,492)
-------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash                                                 1,926            (136)
-------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents                              (16,705,760)        710,589
Cash and cash equivalents at beginning of period                                   36,444,256         129,428
-------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                                       $ 19,738,496     $   840,017
=============================================================================================================
Cash Paid During The Period For:
 Interest                                                                        $    280,331     $   278,424
 Income taxes, net of refunds                                                         836,145         580,644
=============================================================================================================
Supplemental Schedule of Non Cash Activities:
 Capital lease obligation incurred on lease of equipment                         $    358,391     $        --
=============================================================================================================
</TABLE> 

See accompanying notes to condensed consolidated financial statements.

                                    Page 4
<PAGE>
 
Notes to Financial Statements

Note 1 - Basis of Presentation
------------------------------

The accompanying unaudited condensed consolidated financial statements of Market
Facts, Inc. and Subsidiaries ("Company") have been prepared in accordance with
the instructions to Form 10-Q. The results of operations for interim periods are
not necessarily indicative of the results to be expected for the entire year.
For further information regarding the Company's most recently completed fiscal
years, refer to the consolidated financial statements included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997.

Note 2 - Adjustments and Reclassifications
------------------------------------------

The information furnished herein includes all adjustments, consisting of normal
recurring adjustments, which are, in the opinion of management, necessary for a
fair presentation of the interim financial statements.

Note 3 - Revenue Recognition
----------------------------

The Company recognizes revenue under the percentage of completion method of
accounting. Revenue on client projects is recognized as services are performed.
Losses expected to be incurred on jobs in progress are charged to income as soon
as such losses are known. Revenue earned on contracts in progress in excess of
billings is classified as a current asset. Amounts billed in excess of revenue
earned are classified as a current liability. Client projects are expected to be
completed within a twelve month period.

Note 4 - Earnings Per Share
---------------------------

Reconciliations of the numerators and denominators of the basic and diluted
earnings per share computations for the three months ended March 31, 1998 and
1997 are as follows:

<TABLE>
<CAPTION>
 
                                                        Three Months Ended March 31, 1998
                                                        ---------------------------------
                                                                                Per Share
                                                          Income     Shares      Amount
                                                        ----------  ---------   ---------
<S>                                                     <C>         <C>         <C>
Basic Earnings Per Share
  Net income                                            $1,391,407  8,834,939    $  .16
                                                                                =========
Effect of Dilutive Securities
  Stock options                                              --       314,396
                                                        ----------  ---------
Diluted Earnings Per Share
  Income available to common stockholders plus
     assumed conversions                                $1,391,407  9,149,335    $  .15
                                                        ==========  =========   =========       
</TABLE>

                                    Page 5
<PAGE>
 
<TABLE>
<CAPTION>
 
                                                        Three Months Ended March 31, 1998
                                                        ---------------------------------
                                                                                Per Share
                                                          Income     Shares      Amount
                                                        ----------  ---------   ---------
<S>                                                     <C>         <C>         <C>
Basic Earnings Per Share
  Net income                                            $  834,622  6,923,708    $  .12
                                                                                =========
Effect of Dilutive Securities
  Stock options                                              --       192,240
                                                        ----------  ---------
Diluted Earnings Per Share
  Income available to common stockholders plus
     assumed conversions                                $  834,622  7,115,948    $  .12
                                                        ==========  =========   =========       
</TABLE>

Note 5 - Comprehensive Income
-----------------------------

Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" which establishes standards
to report and display comprehensive income and its components in a full set of
general purpose financial statements. The Company's comprehensive income was as
follows:

<TABLE>
<CAPTION>
 
                                                       Three Months Ended March 31,              
                                                           1998             1997     
                                                       ----------------------------  
<S>                                                    <C>               <C>                     
     Net income..................................       $ 1,391,407      $ 834,622               
     Other comprehensive income:                                                                 
       Foreign currency translation adjustments..       $    10,750      $ (13,749)              
                                                        -----------      ---------               
     Comprehensive income                               $ 1,402,157      $ 820,873               
                                                        ===========      =========                
</TABLE>
Note 6 - Acquisition of Strategy Research Corporation
-----------------------------------------------------

On January 1, 1998, the Company acquired the remaining 90% of the outstanding
stock of Strategy Research Corporation ("Strategy Research"). Prior to 1998, the
Company held a 10% interest in Strategy Research. Strategy Research is a full
service market research company specializing in the Latin American and U.S.
Hispanic markets. The purchase price was an amount equal to (i) $1,192,000 in
cash paid at closing, (ii) the assumption of $150,000 of bank debt, and (iii) up
to $1,950,000 of possible contingent payments based on Strategy Research
exceeding certain earnings targets for 1998 and 1999. The acquisition was
accounted for under the purchase method of accounting. The excess of the
purchase price over the fair values of the assets acquired and liabilities
assumed of $1,416,012 has been recorded as goodwill and is being amortized on a
straight-line basis over 25 years. This preliminary allocation of purchase price
is subject to further adjustments; however, the Company does not expect the
estimated values to change materially upon finalization of the allocation of the
purchase price. The operating results of Strategy Research have been included in
the consolidated statements of earnings and cash flows since the date of
acquisition.

                                    Page 6
<PAGE>

Note 7 - Acquisition of Tandem Research Associates, Inc.
--------------------------------------------------------

On March 31, 1998, TRA Acquisition Corp. ("TRA"), a wholly-owned subsidiary of
the Company, acquired certain assets and assumed certain liabilities of Tandem 
Research Associates, Inc. ("Tandem Research"), a 16 year-old firm providing 
specialized custom and multi-client research products and services to leading 
pharmaceutical companies and emerging biotech firms.  The purchase price was an 
amount equal to (i) $14,424,000 in cash paid at closing, (ii) the assumption of 
approximately $590,000 of customer deposit liabilities, and (iii) additional 
contingent payments based on TRA exceeding certain earnings targets for the 
period April 1, 1998 through March 31, 2001 (the "Additional Purchase Price"). 
the Additional Purchase Price equals (i) 3.25 multiplied by the amount by which 
TRA's aggregate earnings before interest and income taxes ("EBIT") during each 
year in the three-year period after the closing exceeds certain specified 
amounts, up to a maximum aggregate payment of $9,000,000, plus (ii) fifty 
percent of TRA's aggregate EBIT during the three-year period after the closing 
in excess of $9,931,000.  At the election of Tandem Research, up to twenty-five 
percent of the Additional Purchase Price may be payable in shares of the 
Company's common stock.

The acquisition was accounted for under the purchase method of accounting. The
excess of the purchase price over the fair values of the assets acquired and
liabilities assumed of $15,434,088 has been recorded as goodwill and is being
amortized on a straight-line basis over 25 years. This preliminary allocation of
purchase price is subject to further adjustments; however, the Company does not
expect the estimated values to change materially upon finalization of the
allocation of the purchase price.

The operating results of TRA will be included in the consolidated statements of
earnings and cash flows beginning April 1, 1998. The following unaudited pro
forma financial information is provided for the three months ended March 31,
1998 and 1997 as though the acquisition had taken place at the beginning of the
periods being reported on:

<TABLE>
<CAPTION>
 
                                 Three Months Ended March 31,
                                     1998             1997
                                 ----------------------------               
<S>                              <C>             <C>                        
  Revenue.....................    $30,585,227     $23,099,006               
  Net Income..................    $ 1,754,482     $ 1,226,327               
  Basic Earnings Per Share        $       .20     $       .18               
  Diluted Earnings Per Share      $       .19     $       .17               
</TABLE>

The pro forma financial results do not necessarily reflect actual results which
may have occurred if the acquisition had taken place at the beginning of the
periods being reported on, nor are they necessarily indicative of the results of
future combined operations.

                                    Page 7
<PAGE>
 
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

Liquidity and Capital Resources
-------------------------------

The Company's liquidity depends primarily upon its net income, accounts
receivable, accounts payable and accrued expenses. Historically, the Company has
financed its operations through cash generated from operating activities and
bank lines of credit. In October 1997, the Company generated $36.9 million in
net proceeds from a public offering of its common stock. The Company intends to
continue using the net proceeds as working capital and for general corporate
purposes, including acquisitions, investments in technology, new product
development and joint ventures.

During the first three months of 1998, cash and cash equivalents decreased by
$16.7 million. The decrease primarily relates to the acquisitions of Tandem
Research and Strategy Research Corporation. Net cash flow provided by operating
activities was $.9 million in the first three months of 1998 compared to $2.5
million in the same period of 1997. The decrease in 1998 compared to the same
period in 1997 was due primarily to the timing of billings on contracts in
progress, partially offset by improved collection of client accounts receivable
and increased net income. Cash used in investing activities was $17.4 million in
1998 compared to $.5 million in 1997. The increase in 1998 compared to the same
period in 1997 was due primarily to the acquisitions of Tandem Research and
Strategy Research Corporation and increased purchases of property primarily
relating to investments in technology. Cash used in financing activities was $.2
million in 1998 compared to $1.3 million in 1997. The decrease in 1998 compared
to the same period in 1997 was due primarily to higher net repayments of 
short-term borrowings in 1997.

The Company has available borrowings under established bank credit facilities
totaling $13.7 million. There were no borrowings outstanding under these
arrangements at March 31, 1998 and December 31, 1997.

The Company believes that the net proceeds from the 1997 public offering of its
common stock, cash flow from operations and borrowings available from its bank
credit facilities will be sufficient to meet its working capital expenditure
requirements for the foreseeable future. It is the Company's intention to
continue to pursue acquisition opportunities as a means to grow, and these
acquisitions may require an amount of capital that exceeds that available from
the proceeds of the 1997 public offering, cash from operations and existing bank
arrangements.

Results of Operations
---------------------
Comparison of First Quarter 1998 to First Quarter 1997
------------------------------------------------------

The Company had first quarter revenue of $29.2 million in 1998, an increase of
35.5% over the same period in 1997. The increase in revenue was due primarily to
the impact of acquisitions made during the past twelve months, continued
expansion of marketing research services within the Company's existing client
base and the addition of clients for whom the Company did not perform any
research services during the previous fiscal year.

Gross margin for the first quarter of 1998 was $12.6 million, an increase of
30.0% over the same period in 1997. The increase in gross margin was primarily
due to the growth in revenue. Gross margin as a percentage of revenue was 43.3%
in 1998 compared to 45.1% in 1997. The decrease in the gross margin percentage
is the result of an unusually high gross margin percentage in the first quarter
of 1997 attributable to a larger mix of business from clients which yielded
higher gross margins.

                                    Page 8
<PAGE>
 
Operating expenses for the first quarter of 1998 rose by $2.2 million, an
increase of 28.0% compared to the same period in 1997. The increase in operating
expenses was due primarily to the impact of acquisitions made during the past
twelve months and increased spending to grow the Consumer Mail Panel. Operating
expenses as a percentage of revenue decreased during the first quarter of 1998
to 35.2% from 37.2% for the same period in 1997.

Other income increased $.3 million during the first quarter of 1998 due to
interest earned on the remaining proceeds from the 1997 public offering of 
common stock.

Net income rose 66.7% to $1.4 million or 4.8% of revenue compared to $.8 million
and 3.9% of revenue during the same period in 1997. Basic earnings per share
increased 33.3% to $.16 for the first quarter of 1998 compared to $.12 for the
same period in 1997. Diluted earnings per share increased 25.0% to $.15 for the
first quarter of 1998 compared to $.12 for the same period in 1997.

Year 2000
---------

The Company is aware of issues associated with the programming code in existing
computer systems as the year 2000 approaches. The Company is utilizing both
internal and external resources to identify, correct or reprogram, and test its
systems for Year 2000 compliance. Management is in the process of assessing the
Year 2000 compliance expense and the related potential effect on the Company's
earnings.


                          PART II - OTHER INFORMATION


Item 5.   Other Information.

Forward-Looking Statements
--------------------------

Certain statements made from time to time by the Company, including statements
in the Management's Discussion and Analysis section above, constitute "forward-
looking statements" made in reliance upon the safe harbor contained in Section
21E of the Securities Exchange Act of 1934, as amended. Such forward-looking
statements include those relating to growth through acquisition opportunities
and statements relating to the Company or its operations that are preceded by
terms such as "expects," "believes," "anticipates," "intends" and similar
expressions. Such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties. The Company's actual results,
performance or achievements could differ materially from the results,
performance or achievements expressed in, or implied by, these forward-looking
statements as a result of various factors, including without limitation, the
following:

Reliance on Key Clients. The Company's five largest clients accounted for
approximately 26%, 26% and 25% of the Company's total revenues in 1995, 1996 and
1997, respectively, with one client, Procter & Gamble, accounting for 12%, 10%
and 11%, respectively, of such revenues. The Company generally does not enter
into long-term contracts with its clients, but operates on a project-by-project
basis. For most of its clients, the Company is not the exclusive provider of
market research services and, therefore, such clients could decrease the amount
of research projects awarded to the Company at any time. Although approximately
90% of the Company's revenue in 1997 was from clients for whom the Company had
performed work in the previous year, the loss of one or more of the Company's
largest clients, or a significant reduction in business from such clients could
have a material adverse effect on the Company.


                                    Page 9
<PAGE>
 
Fluctuations in Demand for Market Research. Demand for the Company's research
services can be affected by a number of factors outside the Company's control,
including fluctuations in clients' marketing budgets, changes in economic
conditions, consolidation and other industry trends and changes in the
management or ownership of a client. In addition, a client's market research
activities are often dependent on the timing of its new product introductions
and reformulations. As a result of such factors, the amount of market research
conducted by the Company for each of its clients has varied in the past and is
likely to continue to vary from quarter to quarter in the future. These
variations can contribute to fluctuations in the Company's operating results
from period to period.

Variability of Quarterly Operating Results. The Company's revenues and earnings
may fluctuate from quarter to quarter based on such factors as the number, size
and scope of projects in which the Company is engaged, the terms and degree of
completion of such projects, expenditures required by the Company in connection
with such projects, any delays incurred in connection with such projects,
employee utilization rates, the adequacy of provisions for losses, the accuracy
of estimates of resources required to complete ongoing projects, and general
economic conditions.

Risks Associated with Acquisitions and Failure to Integrate Acquired Businesses;
Limited Prior Acquisition Experience. The Company has recently completed several
acquisitions and intends to continue expanding through acquisitions as part of
its business strategy. However, there is significant competition for attractive
acquisition candidates, and there can be no assurance that the Company will be
able to identify and acquire attractive acquisition candidates.

Additionally, the Company has had limited prior experience regarding
acquisitions, and there can be no assurance that the Company will be able to
profitably manage acquired companies or successfully integrate such acquired
companies without substantial costs, delays or other problems. Successful
integration of the recent acquisitions will require the experience and expertise
of the senior management teams of the acquired companies, which are expected to
remain with the Company. There can be no assurance that the members of senior
management will remain with the Company for the time period necessary to
successfully integrate the recent acquisitions. Future acquisitions may entail
the payment of consideration in excess of book value, may result in the issuance
of additional shares of common stock or the incurrence of additional
indebtedness by the Company, and could have a dilutive effect on the earnings or
book value per share of common stock.

Competition. The custom market research industry is highly fragmented. The
Company faces direct competition from a large number of relatively small
organizations that serve niche markets but lack the capability to provide a full
range of products and services. Although the Company estimates that it is among
the six largest custom market research firms in the United States, as measured
by 1996 revenue, it faces direct competition from a small number of larger
concerns with resources greater than those of the Company. The Company believes
that as the industry continues to consolidate, it will face increasing
competition from these concerns not only for clients but also for acquisition
candidates. Furthermore, the Company is subject to competition from the
marketing research departments of clients and potential clients, advertising
agencies and survey research departments affiliated with universities and
government agencies.

The Company believes that the principal methods of competition are quality and
speed of research results, the ability to provide customized data collection,
analysis and interpretation, geographic coverage, the ability to guide clients
through the entire marketing research process, the ability to provide creative
recommendations to clients and the ability to attractively price its services.
The Company believes that its ability to properly design research projects and
deliver quality research results quickly, and to customize its projects and
guide its clients through the entire marketing research process are competitive
strengths. The Company also believes that the ability to service the
international research needs of clients has become an increasingly important
competitive factor.

                                    Page 10
<PAGE>
 
Ability to Continue Company Growth; Management of Growth. For the three-year
period ended December 31, 1997, the Company's revenue and net income increased
at a compound annual growth rate of 22% and 60%, respectively. There can be no
assurance that the Company will be able to sustain its recent increases in
operating results. Furthermore, if the Company continues to grow, there can be
no assurance that management will be effective in attracting and retaining
additional qualified personnel, expanding the Company's physical facilities,
updating the Company's systems, procedures and controls, integrating any
acquired businesses or otherwise managing growth. Any inability to manage growth
effectively could have a material adverse effect on the Company's business,
financial condition and results of operations.

Risks of International Expansion. An important part of the Company's business
strategy is to be able to provide market research products and services to its
clients globally and it intends to continue seeking acquisitions, joint ventures
and strategic alliances globally to enhance its existing capabilities. The
international operations of the Company and of its international joint ventures
are subject to numerous challenges and risks inherent in conducting business
internationally, including maintenance of an international data collection
network that adheres to the Company's quality standards, currency control laws,
fluctuations in exchange rates, political turmoil, war, foreign economic
conditions, tariffs and other trade barriers, longer accounts receivable
collection cycles and potentially adverse tax consequences. Further, the Company
may not be able to effectively control their operations, and there is no
assurance that the Company will be able to successfully meet the needs of its
clients through these joint ventures.

Volatility of Stock Price. The Company's common stock has historically been
subject to wide price fluctuations in response to a variety of factors,
including quarterly variations in operating results, the introduction of new
services or products by the Company, its clients or its competitors,
announcements of acquisitions, strategic alliances and joint ventures, general
conditions in the market research industry, and general economic and market
conditions. Additionally, the stock market in general has experienced extreme
price volatility in recent years. There can be no assurance that the price of
the common stock will increase in the future or be maintained at its recent
levels.

Dependence on Proprietary Technology. The Company considers most of its
software, database management methods, modeling techniques and other database
information strategies to be proprietary trade secrets and relies on a
combination of trade secret, trademark, copyright and other intellectual
property laws, as well as contractual agreements, to protect its rights to such
intellectual property. However, due to the difficulty of monitoring the
unauthorized use of and access to the Company's intellectual property, such
measures may not provide adequate protection. In addition, there can be no
assurance that the courts will enforce the contractual arrangements which the
Company has entered into to protect its proprietary technology. Any
misappropriation of the Company's intellectual property could have a material
adverse effect on the Company's business.

Risk of Declining Response Rates. The Company's ability to provide timely and
accurate custom market research to its clients depends on its ability to collect
high quality data through its Consumer Mail Panel(SM) ("CMP"), its own broad-
based panel of consumer households, random telephone interviewing, and other
sources. Response rates in the industry, exclusive of consumer mail panels, have
generally declined in recent years, which could result in lower quality data and
increased project costs. If the Company is unable to recruit and maintain
appropriate CMP members, or if receptivity to the Company's questionnaires and
other data collection methods by respondents declines, or if the Company is for
any other reason unable to rely on the integrity of the data it receives, the
Company's ability to market and sell its research products would be materially
and adversely affected.

                                    Page 11
<PAGE>
 
Reliance on Key Personnel. The Company's future performance will depend to a
significant extent upon the efforts and abilities of key personnel who have
expertise in custom market research and have established relationships with the
Company's key clients. Although customer relationships are managed at many
levels in the Company, the loss of one or more of the Company's key employees
could have an adverse effect on the Company's relationship with one or more
clients served by such persons. The Company's success also depends on its
ability to hire, train and retain skilled personnel in all areas of its
business. Competition for qualified personnel in the Company's industry is
substantial. There can be no assurance that the Company will be able to recruit,
retain and motivate a sufficient number of qualified personnel to compete
successfully.

Item 6.  Exhibits and Reports on Form 8-K.

(a)  Exhibits.

See Index to Exhibits immediately following the signature page.
 
(b)  Reports on Form 8-K.

A report on Form 8-K dated March 31, 1998 was filed on April 8, 1998, reporting
under Item 2 thereof the acquisition of Tandem Research Associates, Inc.


                                    Page 12
<PAGE>
 
                                  SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                              Market Facts, Inc.
                                              ------------------
                                                 (Registrant)


Date:   May 7, 1998                            Timothy J. Sullivan
        -----------                            -------------------
                                               Timothy J. Sullivan
                                 Chief Financial Officer, Senior Vice President,
                                   Treasurer, Assistant Secretary and Director
                                          (Principal Financial Officer)


Date:   May 7, 1998                                Anthony J. Solarz
        -----------                                -----------------
                                                   Anthony J. Solarz
                                                      Controller
                                            (Principal Accounting Officer)



                                    Page 13
<PAGE>
 
                               INDEX TO EXHIBITS

Exhibit Number  Description
--------------  -----------
 
  (3)(a)        Restated Certificate of Incorporation (5), as amended. (14)

  (3)(b)        By-laws as Amended and Currently in Effect. (11)           

  (4)(a)        Article Fourth of the Company's Restated Certificate of
                Incorporation (5), as amended. (14)

  (4)(b)        Rights Agreement as Amended and Currently in Effect. (3)

  (4)(c)        Certificate of Designation, Preferences and Rights of Series B
                Preferred Stock. (10)

  (10.1)        Term Note dated February 23, 1995 between Market Facts, Inc. and
                Verne Churchill. (4)

  (10.2)        Term Note dated February 23, 1995 between Market Facts, Inc. and
                Lawrence Labash. (4)

  (10.3)        Term Note dated February 23, 1995 between Market Facts, Inc. and
                Thomas Payne. (4)

  (10.4)        Term Note dated February 23, 1995 between Market Facts, Inc. and
                Glenn Schmidt. (4)

  (10.5)        Term Note dated February 23, 1995 between Market Facts, Inc. and
                Timothy Sullivan. (16)

  (10.6)        Demand Note and London Interbank Offered Rate Borrowing
                Agreement dated April 30, 1997, between the Company and American
                National Bank and Trust Company of Chicago. (16)

  (10.7)        Mortgage and Security Agreement dated April 11, 1990 between
                American National Bank and Trust Company as Trustee under Trust
                No. 110201-04 and The Manufacturers Life Insurance Company
                together with Mortgage Note. (2)

  (10.8)        Credit Agreement dated June 7, 1996, between the Company and
                Harris Trust and Savings Bank (6), as amended, and Revolving
                Credit Note dated September 4, 1997 relating thereto. (16)

  (10.9)        Employment Agreement with Thomas H. Payne. (13)             

  (10.10)       Employment Agreement with Lawrence W. Labash. (13)          

  (10.11)       Employment Agreement with Timothy J. Sullivan. (13)         

  (10.12)       Employment Agreement with Sanford M. Schwartz. (17)         

  (10.13)       Indemnity Agreement with Jack R. Wentworth dated July 15, 1994.
                (1) Substantially identical agreements were also entered into
                with the following individuals:
                William W. Boyd          Karen E. Predow                    
                Verne B. Churchill       Thomas H. Payne                    
                Lawrence W. Labash       Sanford M. Schwartz                

  (10.14)       Term Note dated March 29, 1996 between Market Facts, Inc. and
                Verne Churchill. (5)

  (10.15)       Term Note dated March 29, 1996 between Market Facts, Inc. and
                Thomas Payne. (5)

  (10.16)       Term Note dated March 29, 1996 between Market Facts, Inc. and
                Glenn Schmidt. (5)

  (10.17)       Term Note dated March 29, 1996 between Market Facts, Inc. and
                Lawrence Labash. (5)

  (10.18)       Term Note dated March 29, 1996 between Market Facts, Inc. and
                Timothy Sullivan. (16)

  (10.19)       Indemnity Agreement with Timothy Sullivan dated September 3,
                1997. (16)

                Substantially identical agreements were also entered into with
                Ned Sherwood and Jeffery Oyster.

  (10.20)       Investment Agreement dated June 6, 1996 among the Company, MFI
                Investors L.P. and MFI Associates, Inc. (7)

  (10.21)       Financial Advisory Agreement dated June 6, 1996 between the
                Company and MFI Investors L.P. (8)

                                    Page 14
<PAGE>
 
Exhibit Number  Description
--------------  -----------
  (10.22)       Convertible Note dated June 6, 1996 in the principal amount of
                $8,250,000 issued by the Company to MFI Investors L.P. (9)

  (10.23)       Market Facts, Inc. 1996 Stock Plan. (12)                   

  (10.24)       Stock Purchase Agreement by and among Market Facts, Inc.,
                Kathleen Knight, Robert Skolnick, Gunilla Broadbent and
                BAIGlobal, Inc. dated as of July 31 1997. (15)

  (10.25)       Employment Agreement with Kathleen Knight. (15)            

  (10.26)       Employment Agreement with Robert Skolnick. (15)            

  (10.27)       Employment Agreement with Gunilla Broadbent. (15)          

  (10.28)       Underwriting Agreement dated October 21, 1997 by and among
                Market Facts, Inc., MFI Investors L.P. and the several
                underwriters named therein. (16)

  (10.29)       Promissory Note dated April 1, 1994 between Market Facts, Inc.
                and Timothy Sullivan. (16)

  (10.30)       Term Note dated December 12, 1997 between Market Facts, Inc. and
                Sanford M. Schwartz. (17)

  (10.31)       Asset Purchase Agreement by and among Market Facts, Inc. TRA
                Acquisition Corp., Donald E. Rupnow, Daniel Fish and Tandem
                Research Associates, Inc. dated as of March 31, 1998. (18)

  (27)          Financial Data Schedule.                                   
__________________

(1)  Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for
     the quarterly period ended September 30, 1994.

(2)  Incorporated by reference to Registrant's Annual Report on Form 10-K for
     its fiscal year ended December 31, 1992.

(3)  Incorporated by reference to Registrant's Form 8-A dated July 3, 1996,
     commission file number 0-04781.

(4)  Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for
     the quarterly period ended March 31, 1995.

(5)  Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for
     the quarterly period ended March 31, 1996.

(6)  Incorporated by reference to Exhibit No. (b) of Registrant's Schedule 13E-4
     dated June 11, 1996, commission file number 5-20859.

(7)  Incorporated by reference to Exhibit No. (c)(1) of Registrant's Schedule
     13E-4 dated June 11, 1996, commission file number 5-20859.

(8)  Incorporated by reference to Exhibit No. (c)(2) of Registrant's Schedule
     13E-4 dated June 11, 1996, commission file number 5-20859.

(9)  Incorporated by reference to Exhibit No. (c)(3) of Registrant's Schedule
     13E-4 dated June 11, 1996, commission file number 5-20859.

(10) Incorporated by reference to Exhibit No. 99(c)(4) of Registrant's Schedule
     13E-4 dated June 11, 1996, commission file number 5-20859.

(11) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for
     the quarterly period ended June 30, 1996.

(12) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for
     the quarterly period ended September 30, 1996.

(13) Incorporated by reference to Registrant's Annual Report on Form 10-K for
     its fiscal year ended December 31, 1996.

(14) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for
     the quarterly period ended June 30, 1997.

(15) Incorporated by reference to Registrant's Form 8-K dated July 31, 1997.

(16) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for
     the quarterly period ended September 30, 1997.

(17) Incorporated by reference to Registrant's Annual Report on Form 10-K for
     its fiscal year ended December 31, 1997.

(18) Incorporated by reference to Registrant's Form 8-K dated March 31, 1998.

                                    Page 15