đź•’ 3 min read
Buying a franchise is a major investment. And although you’re purchasing rights to own a business that’s well-established and has a proven track record, there are still risks associated with this type of ownership. Not every franchise is a good fit for your individual expectations and desires.
While you've done your research and read the books about franchising, the best way to know whether buying a franchise is a good decision for you is to talk to the franchisor before signing. We've given you seven questions to ask a franchisor before signing a franchise agreement before, but here are seven more questions to be sure to ask when you have that conversation.
1. How Do You Choose Your Franchisees?
Franchisors don’t let just anyone buy. There’s a qualification process people must go through in order to become a franchisee. Understanding this process is important for you to know, so you can be sure you check all the boxes before signing on the dotted line.
2. What Are the Details of the Fee?
Franchise contracts aren’t as simple as investing the minimum amount and setting up shop. Each contract includes details about the fees and expenses you’ll be responsible for as the franchisee. Be sure to look specifically at items 5, 6, 7, 8 and 11 and discuss each in detail with the franchisor.
3. What Are the Ongoing Fees?
The initial investment fee is just the start of the checks you’ll be cutting for the franchisor. The way the continual fees work varies depending on the franchise. They can be ongoing fees or royalties. Make sure there are no questions or uncertainties about what those fees will look like before you buy your franchise.
4. What is Your Success Rate At Your Other Locations?
Although the franchisor will not be able to predict your success rate, you can learn a lot by looking at other locations and their success rates. Look specifically at other franchises that are owned in a similar region or with a similar demographic as you’ll be targeting.
5. What Ongoing Support Do You Offer?
The vast majority of franchisors offer initial training, however not all franchisors offer ongoing trainings and support. Ask your franchisor what you can expect after you’ve firmly established your roots and are well on your way.
6. Will You Protect My Territory?
Some franchisors operate in a way that allows you to claim a certain territory, so no one else can cannibalize your sales. Other franchisors don’t have territory rules in place. Talk to your franchisor before you sign, so you know where the territory lines are and how you’ll be protected.
7. What Kind of Input Will I Be Able to Have?
As you get your hands dirty in your business, you’ll come up with your own creative ideas for how to market, advertise, and run your company. When you do, you want to know that you have the freedom to implement those ideas. Sometimes franchisors won’t allow you this flexibility. Other times they will. Ask before you sign if this is important to you.
Know Before You Sign
It’s important you know what you’re buying into when you sign on the dotted line. Talk to your franchisor openly and candidly before you commit to buying a specific franchise.
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.