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Apr72020
OWNERSHIP

Want to Buy a Franchise? Ask These Questions First

Before you buy a franchise, it’s critical to thoroughly research potential opportunities and carefully review the Franchise Disclosure Document (FDD). As part of the franchise approval process, you will have an interview with the franchisor. It’s also important to speak to some past and current franchisees to gain more insight into what it’s really like to be an owner within the franchise system. If you’re not sure where to begin, the following sample questions can help get the ball rolling. 

Questions for Franchisors

1. How mature is the brand?

Some franchise systems are backed by a nationally renowned brand name and decades of franchise experience. A mature brand with a proven track record of success can be especially beneficial if you’re a first-time business owner looking for additional guidance to help your business thrive.

2.  Will training be provided?

A good franchise will be committed to helping you succeed by providing the tools and training necessary to get you started off on the right foot. The best franchise opportunities will provide a comprehensive training program that covers more than just basic operational procedures.

3.  What ongoing training, support and development opportunities do you offer?

Aside from the initial training, find out what kind of ongoing assistance is available. Is there a support team you can reach out to with questions? Do the brand’s franchisees work collaboratively to learn from one another and help each other succeed, or do they view fellow franchisees within the network as competition?

4.  What type of marketing, advertising and promotion do you provide?

While you can generally expect to receive marketing assistance and grand opening guidance when first opening a franchise business, the type of marketing and advertising support provided beyond that can vary greatly among franchisors. Experienced brands may provide their franchisees with multiple levels of advertising and marketing communication support, but assistance from new brands could be limited.

5. What is the total short and long-term financial commitment?

Although the FDD outlines all initial and ongoing fees along with an estimated initial investment range, it’s important to discuss these items in depth with the franchisor before committing to buy a franchise. Keep in mind that you will also need enough operating capital to support the business until it breaks even. The franchisor should be able to give you an idea of how long it typically takes franchisees in the network to become profitable.

6. Do you offer funding, incentives or deals?

The costs associated with opening a franchise business can be a significant factor in finding the right opportunity. Some franchisors offer financing options for their franchisees. Many also offer special incentives for veterans, women and minorities such as discounts on the franchise fee or reduced royalties. Some also offer lower fees for certain business models or opening a location in specific geographic areas.

Questions for Franchisees

1. How long have you been a member?

Aim to speak with a good mix of newer and more seasoned franchisees to help get a better picture of what ownership is like. Also ask franchisees about their relationship with the franchisor and whether it has changed over time.

2. Why did you buy a franchise in this network?

The key here is to learn how the factors that motivated others align with your background and objective for opening a franchise business in that network.

3. How do you spend most of your time?

Current franchisees can provide valuable insight into the day-to-day operations and the amount of work, time and energy required to help you get a better understanding of what business ownership is like.

4. What's the most difficult aspect of operating this franchise?

Learning more about the greatest challenges from those on the frontlines can help determine how well the franchise would suit you.

5. Was the initial training you received adequate regarding all aspects of running this business?

If you receive a negative response, find out why they feel training was inadequate. What was missing? Also inquire how readily available the franchisor is to field questions on the fly and provide additional support when needed.

6. Knowing what you know now, if you had it to do over again, would you still buy a franchise in this network? Is there anything you would do differently?

A franchisee’s response to this question could be the most revealing insight you receive about what it’s like to be a member of that franchise system. Hopefully the answer you receive is a positive one and helps you decide whether to further pursue franchise ownership with that brand.

 

If you want to buy a franchise, asking questions like these are critical for making a truly informed decision. While the FDD provides a wealth of information, it can’t answer all the questions you might have about what it’s like to own and operate a franchise. Speaking to a wide cross-section of franchisees in addition to the franchisor can be one of the best ways to determine if a franchise is the right fit for you.