🕒 3 min read
Deciding to buy into a particular franchise is a large commitment, and one you should never take lightly. Not only is becoming a business owner a major decision, but you also want to make sure that the particular franchise brand that you've chosen is the right fit for you. That's why it's important to ask all the right questions.
Before you sign that franchise agreement, raise these seven questions to ensure that you're making the right move.
1. Can I Talk to Other Franchisees About Their Experiences?
The right answer here is, “Absolutely!”
A franchisor who hesitates before letting you speak to other franchisees should raise red flags. There may be a reason the brand doesn't want you speaking with franchisees, and that should be a concern.
Keep in mind: you don't need permission to talk to franchisees. If you get resistance from the franchisor, seek out other franchisees on your own and see what they might be hiding.
2. May I See Your Financials?
By law, franchisors must provide you with this information, so you're well within your rights to ask for financial information. Not sure what you're looking for? You want to see that the company is financially responsible, and if there are large expenses or concerns, ask for an explanation.
One thing in particular to look at is marketing, since it will affect you. How much is the company putting into marketing for its franchisees?
3. How Do You Support Franchisees with Marketing?
Since we're on the subject of marketing, bring it up with the franchisor. Certainly, you will have responsibility marketing your location in your community, but it always helps to have the backing of a company that can afford national commercials, social media campaigns, and other advertising endeavors to root its brand into consumers' subconscious.
4. What Does Your Training Program Look Like?
There will be much you will need to learn to acclimate yourself to this franchisor’s processes and systems, so get a sense of what that training will look like. Training may require you to fly to company headquarters for a few weeks; if so, you need to build that into your calendar early. Does it extend to your new staff, or will you be responsible for training them? What does ongoing training support look like?
5. What are All the Fees a Franchisee is Responsible For?
Sure, there's the obvious fee you pay up front, but you will likely also have to pay monthly royalty fees based on sales, and perhaps even an advertising fee. Knowing all the fees up front can help you calculate whether you have enough opportunity to profit from this franchise.
6. Do You Have Preferred Vendors?
Many franchisees are shocked to find that a franchisor has an established list of vendors that they cannot deviate from. These may not be the cheapest options either, but the franchisor believes the supplies to be of the appropriate quality, and so may require you to use them.
7. Will I Have a Dedicated Account Rep?
What happens once you sign that franchise agreement and get trained? Will you be stuck on hold calling the service line to get a question answered, or will you have a dedicated individual you can reach out to when you need a helping hand?
The more information you arm yourself with in the research stage, the better equipped you will be as a franchise owner.
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.