One of the most important things you can do before
buying a franchise is to talk to franchisees who currently operate a unit within the brand you are considering. Get to the heart of how they feel about the franchisor, how profitable they are, and whether they would do it all over again with your questions.1. How long did it take you to break even?
It’s important to understand that you won’t be profitable in the first few months of opening your franchise...possibly even the first year. Find out from current franchisees how long it took them to get to break even, and then to profitability so you can build your budget around it.
2. Do your sales match up to what the Franchise Disclosure Document listed?
One of the reasons you should carefully examine the Franchise Disclosure Document for a given franchise is to get a sense of the kinds of revenues the average franchisee brings in. But beyond that, you want to talk to franchisees to ensure that what’s listed for sales and revenue in the FDD matches up to reality.
3. Is the local marketing program and national marketing program a benefit to you?
Each franchisor provides a certain amount of marketing to franchisees, typically on the national level (commercials and advertising). But how do franchisees feel about what’s offered? Does it actually help drive traffic and sales?
4. Are you happy with the ongoing support provided by the franchisor?
You want to work with a franchisor who will be supportive of your efforts to build your business. How responsive is the franchisor to current franchisees? Is the brand willing to provide the necessary materials not only to start but also to grow a franchise over time?
5. What has been the most difficult aspect to running your franchise? The easiest?
If you can warm up a franchisee enough, you can get the real dirt on what it’s been like. You might be surprised at how much one has struggled to find good employees or bring customers in the door. Knowing the challenges, as well as the easy parts, can help you decide if owning a franchise is the right decision for you.
6. What are competitor franchises and is your product or service competitive?
Many first-time franchisees don’t bother to look around to see who they will be competing against, which is a shame, because competitors, especially in close proximity, can seriously impact revenue. A franchisee might tell you, for example, that the local coffee shop around the corner is so well-known that she has trouble taking customers away from them with her coffee franchise .
These are a just a few of the questions that can provide great insight into what becoming a franchisee for a given brand is like.
Susan Guillory is the President of Egg Marketing & Communications, a marketing firm specializing in content writing and social media management. She’s written three business books, including How to Get More Customers With Press Releases, and frequently blogs about small business and marketing on sites including Forbes, AllBusiness, The Marketing Eggspert Blog, and Tweak Your Biz. Follow her on Twitter @eggmarketing.