Franchise Questions That Must Be Asked AND Answered
Franchise Questions & Information – What You Need To Know
You may be thinking about buying a franchise. Or you may be an entrepreneur thinking about franchising your business. Or, you may simply be curious about the industry. Whatever the case, you already have some franchise knowledge because franchising touches everyone’s life. Whether we’re eating, shopping, watching ads, working or investing, franchising is a constant. But, unless we’re immersed in the industry we don’t know much about its inner workings. Why would we?
So, let’s take a short dive into a couple of areas covering the most interest, namely buying a franchise or franchising a business. These questions only scratch the surface for franchise information, but they’re a good start. The articles, information and commentary found at this site are born of years in practice across all phases of the franchising. So, you’re invited to read further. This is a starting point for franchise investigation, and simply that, a starting point.
Franchise Questions That Franchise Buyers Should Ask …
… Of A Franchisor
Despite many claims to the contrary, franchising is not all blue sky and bliss. Franchise failure is actually high. In fact, very high for certain brands. There are many unhappy franchisees and many buyers who have defaulted on their SBA loans. You must do your homework. You must learn to conduct or get help conducting pre-purchase franchise due diligence.
- How long have you been franchising?
- How many units are in your network?
- Have you had any failed franchisees? If so, can you tell me the main reasons why?
- In your FDD (Franchise Disclosure Document), do you provide a ‘financial performance representation?” (That is some representation of how franchisees are performing.) If not, why not?
- How is your concept different or better than another franchise in the same business?
… Of A Franchise Salesperson or Broker
If you make contact with a ‘free franchise consultant‘ ask specific questions about how the relationship is going to work. There are benefits to this relationship. Just be sure to understand who the players are and how the money and introductions flow.
- How many concepts do you represent?
- How long have you been a franchise consultant?
- If you aren’t charging me, how are you compensated?
- Will you be introducing me to franchises outside of your network?
- Do you assist with due diligence to find out both the good and the not so good about a concept?
Franchise Questions That A Prospective Franchisor Should Ask
Franchising a business can be a great expansion tool for successful businesses. But it’s also a very difficult road to travel and the bleached bones of many hopeful franchisors litter the franchise trail. Here are the critical items to first consider. While the questions sound simple, meaningful answers require a lot of thought and examination. Get the help required to make meaningful decisions.
- Is my business franchise material? (Don’t be fooled by false prophets and salesmanship.)
- Am I franchise material?
- How much will it cost to franchise? How much ‘should’ it cost to franchise?
- What would my life look like if I take this road?
- What are the pros and cons of becoming a franchisor?
Summing Up Necessary Franchise Questions
Every industry, every business has its finer points and nuances. In the case of franchising, the more you dig the more you’ll find that it’s an industry with far more depth than you would imagine as a casual observer. Franchise information is not hard to gather, but knowing what questions to ask is a different story. For a buyer, franchising can be the road to successful self-employment. For the successful entrepreneur, franchising is still a wide open space where a single location can be grown to national or international presence.
The more franchise questions you ask, the more you’ll learn to ask. Good Luck!