Questions to ask when buying a franchise
Questions to ask a Franchisor
Once you’ve had your interview and presentation from the Franchisor, it’s important to ask your questions to get a solid understanding of who they are.
1. Will the franchisor help me find a good location?
Depending on where you want to open your franchise’s doors, the franchisor should have an understanding of the best sites available in a particular area. Sometimes your Franchisor will help you pick the best site for your franchise. At the very least they may be able to help with lease negotiations.
2. Can you tell me more about your training program?
Beyond the procedures for training new hires, you should find out what’s involved in the company’s operational training program, and the types of additional support offered. Support can range from assistance during your grand opening to various types of ongoing support once your doors have opened.
3. Can you provide extra financial assistance?
The franchisor may be able to assist you with your financing needs—or at the very least provide lender recommendations or support through the ACCC. Beyond the initial franchise fee, your franchise agreement statement of information outlines your additional expenses, which may include grand opening promotions, business and operating licenses, equipment, business insurance, and employee salaries. Other ongoing costs may also include advertising fees, accounting, and legal help.
4. How are disagreements resolved?
While no franchisee wants to experience conflict with a franchisor, it could potentially occur. If there’s a disagreement between the franchisor and a franchisee, you’ll need to understand the best method for resolving it. Furthermore, it’s important to find out if the franchisor has had a history of disagreements—or pending legal proceedings—with other franchisees in the past. You can learn about current or pending legal proceedings of the franchisor by reading your statement of information.
Questions to ask existing Franchisees
Your conversation with a current (or former) franchisee may be a bit more laid back than it is with a franchisor since this is a franchisee-to-franchisee relationship. Ultimately, you want to get a better understanding of what a typical day in their world is like: the highs and the lows that come with owning a franchise.
1. What’s a typical day like in your franchise?
The franchisee will be able to offer insight into the day-to-day operations that come with running that franchise, including success stories, challenging moments, and how much hard work, time, and energy will be spent on the business.
2. What are the hidden fees?
While you grill the franchisee on all things money—including the amount of time it took them to earn a steady profit—you’ll also want to inquire if there were any hidden fees or expenses. This will allow you to better financially prepare yourself to avoid any unwanted financial surprises.
3. What’s the relationship with your franchisor like?
Keep in mind that the statement of information will note whether franchisees have signed confidentiality agreements that keep them from speaking to you. If that’s the case, you may not be able to ask them about their relationship with the franchisor (or even chat with them, period). However, if the franchisee did not sign an agreement, they may be able to tell you if the franchisor has been supportive to their needs and has continued to reach out to them on a regular basis, which is a sign of a great franchisee-franchisor relationship.
4. Are you happy that you decided to become a franchisee?
If you had to do it all over again, would you change anything? Pick another industry? Work with another franchisor? Or, are you content with the investment you made and wouldn’t change a thing? The franchisee will likely be honest with you about the decision they made, and hopefully their answer is a positive one.
If you’re looking for the perfect franchise business for you and your family, look no further than JAN-PRO.