Conducting thorough research is an essential component of becoming a franchisee. Before you affix your name to any documents, you want to be as sure as possible that the relationship that you’re entering into is one that will be beneficial to you over the long term. For this reason, there are several questions you should ask other franchisees, and there are several questions you should ask franchisors. Let’s take a look at the most important ones for each.
Questions You Should Ask The Franchisor
The Franchise Disclosure Document should serve as a jumping off point for understanding the franchisor. Likely, you’ll come up with some of your own questions as you review that document. In addition to those questions, you’ll want to ask and have the answers to the following:
1. How would you describe your corporate culture and values? (Do they align with yours?)
2. How are disputes between franchisees, as well as between franchisees and yourself, resolved?
3. Will I receive support for securing a lease and for identifying an ideal location for my franchise?
4. Do you offer any assistance with financing, either directly or through an approved / preferred third party?
5. How long does it take the typical franchisee to make back their initial investment?
6. Is there any pending litigation against the company?
7. What are the company’s long-term goals, and how does the company plan to achieve those goals?
8. What assistance will the company provide when I’m first starting out?
9. After coming to an agreement, how long will it take for my franchise to open its doors?
10. What options are available to me in terms of an exit strategy?
Question You Should Ask Other Franchisees
There is perhaps no better source for understanding what your franchise relationship is going to be like than other franchisees. Therefore, you’ll want to ask them the following questions:
11. What kind of support (if any) does the franchisor provide? Did you find it useful?
12. Are there any costs that you’ve come across that you weren’t aware of when you started?
13. How have things operated in your territory? Have you faced pressure from other franchisees in the immediate area?
14. What’s your background, and do you feel that your background has played a role in your franchise’s success?
15. What unexpected difficulties have you encountered, and how did you go about solving them?
16. Do you feel that the franchisor offers adequate support for marketing and advertising?
17. Do you plan to expand your business by opening additional franchises?
18. What kind of restrictions have been placed upon you, and do you feel those restrictions help or hinder your ability to run your business?
19. Has the franchise lived up to the expectations you had when you started? If not, why do you think that is?
20. Are you happy? If not, why?
Even after you’ve taken the plunge, you’ll still want to remain inquisitive. Understanding how the franchise environment is changing and evolving will be essential to your long-term success, so be sure you never stop asking questions!