10 Questions You Must Ask Franchise before Joining

As we mentioned in the previous post the franchising model provides a springboard to many would-be entrepreneurs who dream of owning their business; but do not have experience or time needed to take care of myriad aspects of running a small business.
While franchising does provide the needed support and tools for running the business; many people wrongly believe that because they are going in the franchising business they can operate the business without much effort on their part. Nothing could be further from truth. It is imperative that you do your homework before signing the franchise agreement and hand over the check for franchise transfer fee.

We recommend meeting with the representatives, preferably senior leaders, from the franchise at least twice. You should also talk to current and past franchisees to get perspective from the other side. By law, the franchise is required to provide you with the names of franchisees you can contact.
You goals when meeting with the franchise and the franchisee should be to have answer to these questions:

  • How strong is the franchise brand in the market? Will it survive long-term against current and future competition?
  • How is their product offering? Do customers like it?
  • How do they run their operations?
  • How expensive is it to own the franchise? How much money will you need to hand over to them in exchange for franchise rights?
  • How much support do they provide to franchisees?

With these goals in mind here are 10 questions you must ask in the first meeting with the franchise? Feel free to add more in the comments below.

  1. What marketing and advertising activities are performed by the franchise?
  2. How does ad fund / marketing contribution made by the franchisees work? How much influence do franchisees have in terms of how this money is spent?
  3. What are your top selling products? Which new product have you introduced recently?
  4. How often do you introduce new products?
  5. How often do you perform quality inspections? What are the rules for violations and remediation?
  6. What are the requirements for purchasing ingredients and other support material?
  7. How much does it cost to open a new location? Could you provide cost breakdown?
  8. What are the various one-time and recurring fees paid by the franchisees?
  9. How long does it take for franchise approval?
  10. What support do you provide to the franchisees during transfer? Ongoing?

Image Courtesy:   retailmania

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