So without further adieu, here are some of the best questions to ask franchisees before buying a franchise:
- 1. What happened that made you decide to buy a franchise business?
- 2. How did you find this franchise opportunity?
- 3. Why did you end up choosing this franchise? ...
- 4. How long, from beginning to end, did it take for you to do your research, and sign the franchise agreement?
- 5. How long did it take for you to open your business?
Full Answer
What to consider before buying a franchise?
What to Consider Before Buying a Franchise
- Make Sure Your Family is On Board. Owning a franchise—or a business of any kind—is truly a family affair. ...
- Count Your Cash. ...
- Reach Out to Other Franchisees. ...
- Do Some Soul Searching. ...
- Test the Product. ...
- Understand What You’re Getting Into. ...
- Talk to a Franchise Consultant. ...
- Come Up With an Exit Strategy. ...
- Consult With Franchise Experts. ...
- Do Your Due Diligence. ...
What to know before you buy a franchise?
If you’re interested in franchising, you should explore the following:
- Any and all existing reports: Now’s the time to put your detective hat on. To start, get a Uniform Franchise Offering Circular (UFOC). ...
- Associated rules and regulations: Every franchise is different. ...
- Contracts: The contract between the two parties usually benefits the franchisor more than the franchisee. ...
What are the pros and cons of buying a franchise?
The Pros and Cons of Buying a Franchise: Is it Right for You?
- Advantages of Franchising. Advantage 1: Explore a New Career, Work in a New Industry! ...
- Disadvantages of Franchising. Depending on which franchise you choose to invest in, the initial investment can be hefty, especially for big-name franchises.
- Overlooked Realities of Franchising. ...
- Advantages and Disadvantages of Buying a Franchise. ...
What do you need to know about buying a franchise?
Ten Things To Consider Before Buying A Franchise
- What's the story on the franchisor's business record and reputation?
- Have you spoken to existing franchisees?
- Have you contacted government consumer protection agencies, Canadian Franchise Association and your local Better Business Bureau?
- Is the franchisor's infrastructure comprehensive and stable?
How much do I need to invest to open a franchise?
What should be included in a franchise investigation?
What is the importance of having a discussion with a franchisee?
Can a franchisor predict your success?
Can I speak with current franchisees about their experience?
What are good questions to ask when buying a franchise?
Overall Questions to ask the Franchisor:Where will your franchise be located?What is the success rate of existing franchises?What method is used to protect franchisees from poorly performing franchises?Is there a franchise owners association?Is there a franchise advisory council?More items...
What are three 3 points that should be considered prior to buying a franchise?
What Should I Consider Before Buying a Franchise?The type of experience required in the franchised business.The hours and personal commitment necessary to run the business.The track record of the franchisor, and the business experience of its officers and directors.How other franchisees in the same system are doing.More items...
What are the five qualities of a good franchise?
5 characteristics of a good franchiseeAbility to follow instructions. The foundation of the franchise model is that all franchisees follow the same system, offering the same products and services in their respective territories. ... Adaptable to change. ... Driven. ... Similar qualities to franchisor. ... Forward-thinking.
What question should you ask yourself before opening a franchise?
Questions You Should Ask Yourself Before Becoming a FranchiseeDo you want to manage and operate a business — regardless of whether it is an independent business or a franchise?Do you always have to be right? ... Do you have the need to experiment with your products and services?More items...
How do you know if a franchise is good?
Signs of a great franchise opportunityIndustry growth. What is the growth potential of the industry you're considering? ... Unit growth. ... Strong support from the franchisor. ... Good management. ... Marketing and advertising support. ... Satisfied franchisees. ... Adequate earnings. ... Sound financial statements.More items...
What are the four big factors to consider when selecting a franchise?
10 Factors to Consider when Selecting a FranchiseProven sales record. The benefit of investing in a franchise is to capitalize on a successful enterprise. ... Growing market. ... Competition. ... Repeat business. ... Healthy living. ... Upsell opportunities. ... Profitable business model. ... Personal interest.More items...
What makes franchise successful?
A franchise becomes successful because people recognize the brand, and people know the brand because of consistent services. This is why a standardized business process is essential to running a successful franchise.
What makes a successful franchise owner?
To be a successful franchise owner, you must know how much you can invest and how much risk you are willing to take. You need to account for living expenses until the franchise is profitable and make sure you have enough money to provide everything your franchise needs.
What skills do you need to own a franchise?
With that in mind, here are the top five skills a person must have to be a successful franchise owner.Marketing Skills. ... Business Management Skills. ... A Business Owner Mentality. ... Family Support. ... Ability to Follow a System.
How do I prepare for a franchise interview?
How to Prepare for the Franchise InterviewBe Aware of Potential Challenges. Do your homework. ... Analyze Your Financial Situation. ... Talk to Current Franchisees. ... Questions for the Franchisor. ... A Mutually Beneficial Relationship.
Why do you want to buy a franchise?
A franchise system not only minimizes the risk by having an existing business model, it also gives you a support system for the unknown. Owning your own business is exciting and rewarding, and franchising helps you minimize the risks and maximize the opportunity.
What questions should a business owner address before trying to enter franchising?
Sample questions to ask a franchisorWill the franchisor help me find a good location? ... Can you tell me more about your training program? ... Can you provide extra financial assistance? ... How are disagreements resolved? ... Other Articles From AllBusiness.com:What's a typical day like for your franchise?More items...•
What are the points to consider in evaluating franchise agreement?
When it comes to finance, there are three main elements you should consider in any franchise opportunity: the initial investment, working capital and ongoing fees. Underestimating the amount of money needed to start and successfully run a franchise unit is one of the biggest reasons why franchisees fail.
What is the most important consideration in franchising business?
Important considerations for your franchise model include fee and royalty percentage, terms of agreement, size of territory awarded to each franchisee, geographic areas in which you are willing to offer franchises, the specifics of your training program, and more.
What steps should a potential franchisee take before investing in a franchise?
Buying A Franchise: 5 Essential Steps To Take Before InvestingAssess Your Skill Set. ... Identify Your Passion And Long-Term Goals. ... Calculate Your Investment Level And Future Profitability. ... Speak With Franchisees And Assess The Franchise Disclosure Document. ... Get To Know The Franchisor.
What should a franchisee do before going into a franchise agreement with a franchisor?
Franchise Agreements - 6 Things to Do Before You Sign OneMake sure you're a good fit for the industry. ... See what other people have to say about your potential franchisor. ... Find out how much it's going to cost. ... Figure out what kind of support you're going to get from up top.More items...
The 10 Questions You MUST Ask Before You Buy a Franchise
Buying a franchise is a substantial investment. Most franchisors require a one time “franchise fee,” which can be as low as $10,000 or well over $100,000. The typical fee for a single unit generally falls in the $20,000 to $40,000 range. In addition, most single unit concepts also require substantial initial capital outlays in order […]
15 Questions you Must Ask Before Buying a Franchise
Talk to Franchisees Before You Buy a Franchise. In your investigation of a franchise company your most accurate source of information is going to be the franchise owners. Franchise owners can provide the real story on what your life could look like when you buy a franchise.
How long does it take to become a franchisee?
Try to balance your inquiries between new franchise owners and those who have been in the system for some time. It may take six months to a year to become a mature franchisee, therefore you may get entirely different answers ...
What is a franchise disclosure?
Franchise owners can provide the real story on what your life could look like when you buy a franchise. The franchise disclosure document you received from the company has a section containing the names, addresses and phone numbers of owners at the time the document was printed. In addition, you need to ask the company for a list ...
What to do if you are speaking with a disgruntled owner?
If you sense you are speaking with a disgruntled owner, ask tactfully what they feel specifically is wrong. Once you have contacted a large percentage of owners, you'll have a lot of notes to compare; if you sense negative trends, it is sufficient reason to raise a relevant question with the franchisor.
Do franchise owners have to speak to you?
Keep in mind two points: (1) There is really no obligation on the part of the franchise owners to speak to you; and (2) They are independent business people with businesses to run... keep your time as brief as possible, and call during normal business hours. Tell them who you are and why you are calling, and ask if there is a better time ...
Why are franchises closing?
Even the best franchise brands have closed locations for one reason or another. In some cases, it's the franchisee's fault. Maybe they didn’t have the proper skill set or follow the system. In other cases, it's the franchisor's fault. It could be a bad business model or insufficient training. No one goes into business to fail, so it's important to examine a brand's failures no matter who was at fault.
What is a franchisee's territory?
A franchisee's territory is the area in which the franchise can operate. Territories vary depending on the brand and customer base. Some, such as senior care franchises, might determine a territory based on the senior population in the area. Others, such as gyms and food franchises, might set a location based on a fixed radius.
What does knowing how things went in the worst of times give you?
Knowing how things went in the worst of times will give you insights into how things might go in the best of times — or in the event of another crisis.
Do franchisors need to be trained?
Although all franchisors will train you and give you a system to follow, some require a specific skill set. If the franchisor tells you that you will need to network and build relationships in your community, it means you will have to spend time connecting with people at local networking groups to build a clientele. It also means some sales skills are needed. Not for you? Then maybe it's time to move on. If the franchisor says you should have team-building skills, take it seriously. If you prefer working solo or don't like delegating, you should look elsewhere.
What to talk about before signing a franchise agreement?
Also, before signing a franchise agreement, talk with your spouse and anyone else who will be affected by your decision and make sure they understand the commitment necessary to get a business off the ground.
How to validate a franchise?
Another way to validate franchsies is reviewing satisfaction reports that FBR compiles for top brands. These reports offer deep insight into franchisee survey responses across several categories. Looking at aggregate response data in combination with speaking to individual owners is an effective way to vet brands before buying.
What is the final step in the research phase of your franchise journey?
The final step in the research phase of your franchise journey is speaking with other franchisees. As Cindy and Phil Bacon, franchisees of FASTSIGNS said, “Do your due diligence and contact as many franchisees as possible.” Current franchisees can be the best sources for unbiased and unfiltered information and can help you validate or invalidate the franchises you are considering.
Why is franchising important?
Franchising offers an exciting opportunity for eager entrepreneurs who are interested in running their own business but are hesitant about starting from scratch. Buying a franchise often comes with less risk than a traditional startup and offers franchisees an accelerated path to profitability.
Why is it important to ask franchisors the right questions?
Asking a franchisor the right questions in the right way is critical to learning more about the brand and whether it will be a good fit for you. The trick is to ask open-ended questions that will really make franchisors think before they answer.
What is franchising beauty?
This established system is the beauty of franchising as it offers reduced risk, streamlined business operations and a quicker runway to profitability. But in order for the system to work franchisees must fully comply with and follow the system laid out by the franchisor.
How long does a franchise contract last?
Franchise agreements may run for as long as 20 years. Renewals are not automatic. At the end of the contract term, the franchisor may decline to renew or may offer a renewal that doesn’t have the same terms and conditions as your original contract.
How much does it cost to buy a franchise?
Buying a franchise is a substantial investment. Most franchisors require a one time “franchise fee,” which can be as low as $10,000 or well over $100,000. The typical fee for a single unit generally falls in the $20,000 to $40,000 range. In addition, most single unit concepts also require substantial initial capital outlays in order to open. Franchisees must pay expenses for line items like construction, fixtures, equipment, and decor. These can be extremely low if no physical location, build-out, or expensive equipment is required. They can also be extremely high ($500,000 to $1,000,000+ range) if those are needed.
How much do franchisees pay royalty?
Most franchisors require franchisees pay their royalty fee as a percentage of weekly or monthly gross income. Royalty fees vary significantly industry-to-industry, but typically fall somewhere in the 3%-10% of gross income range. Franchisors may also require royalty fees in another form including a flat monthly or weekly fee.
What is The Real Cost of A Lemonshark Poke Franchise?
However, other fast-casual restaurants may also have a place and opportunity to become an investment in the long run. One of them is LemonShark Poke, self-dubbed as a “fine casual” offering healthier food options for consumers needing a quick bite.
How long is franchising phase 1?
The duration of Phase I will be 15 hours or longer, conducted within a one to three-week period. In some instances, the franchisor MAY require a Franchise Consultant to join the training. However, the training may take longer depending on the attendees’ knowledge and experiences. As for the location, the franchisor may assign a location, or it could be held over video conference.
How long does it take to complete franchising training?
Once Phase I is completed to the franchisor’s satisfaction, an owner and manager should complete Phase II training. It takes about ten days to complete, with the topics Business and Systems covered. Meanwhile, the training location depends on the franchisor. It could be in one of their offices in Waco, Texas. It may be in other locations or could be conducted through video calls.
Does franchising cover the initial cost?
The franchisor may cover a percentage of the initial franchise cost. This will depend on the franchisee’s creditworthiness and other collateral presented to secure financing.
Do you pay royalties for franchising?
Typically, you pay royalties for the right to use the franchisor’s name, even if you are losing money. You may have to pay royalties for the duration of your franchise agreement even if the franchisor doesn’t provide the services it promised.
How to do good franchise research?
To this end, one of the most effective ways to do good franchise research is to contact existing franchise owners by phone-and talk to them. Ask these franchisees lots of questions. But not just any questions.
How to call franchisees?
1. Have a printout of the questions in front of you before you start calling franchisees. I know this one sounds obvious, but because you have a lot on your mind, you may forget to print the questions out. 2. Know who you’re going to call before you start the process.
Can you call franchisees who have businesses in your area first?
3. As much as you’re tempted, don’t call franchisees who have businesses in your area first.
About this Checklist
To be successful with franchise investments, you don't necessarily need to be a subject matter expert for the industry, but you do need to know what questions to ask when doing your due diligence. This checklist covers the essential areas you should focus on while considering an investment in a franchise.
Top questions
How experienced is the franchise owner? How much training and help will the franchise owner provide? What is the product you are going to be selling?
In general
What makes this franchise special and unique compared to other franchise alternatives? What makes you like this Franchise over other franchises? If you were to play devil’s advocate, what are the negative things about this particular Franchise?
About you
A franchise is typically dictated by standard operating procedures and specific rules that need to be followed for the franchise owner to ensure uniformity in the product. Does your personality type match this type of day-to-day operations? Buying a franchise will take a lot of your time - especially in the beginning.
The investment
Does the franchise owner require that you make an initial investment? How much is the amount? What is the money going to?
Franchise owner
What guidelines are provided by the franchise owner? Does the franchise owner offer any financing? What are the terms of this financing?
Competition
Are there other direct competitors from the same franchise in the area? Are there other competitors from similar franchises in the area? Are your competitors thriving or struggling?
How much do I need to invest to open a franchise?
How much do I have to invest before I can open my doors? The initial investment for starting a franchise can vary from a few thousand dollars to more than a million. Item 5 of the Franchise Disclosure Document (FDD) lists the initial franchise fee, and Item 7 details additional start-up costs such as real estate, equipment, licenses, etc. Be sure to discuss these items in depth with the franchisor so that you have a clear understanding of your investment and what you will need financially to get up and running.
What should be included in a franchise investigation?
Every franchise is different and it’s important to know exactly what you’re buying into. A thorough investigation should cover all aspects of the franchise system and include information from the franchisor, past and present franchisees, and third-party sources. Download our free 'Minimizing Risk' e-book for more ways to mitigate your risks when buying a franchise.
What is the importance of having a discussion with a franchisee?
It’s important to have a discussion with the franchisor to gain a clear understanding surrounding what is required of you as a unit operator.
Can a franchisor predict your success?
Though a franchisor can’t predict your individual success, they should have a good idea about what a typical franchisee earns and your income potential. Be aware that the franchisor may offer information regarding gross sales which don’t include expenses for rent and other operating costs.
Can I speak with current franchisees about their experience?
Franchisors are required to disclose the contact information for both current and past franchisees. Speaking with both can give you an honest perspective on how the franchise system operates and its pros and cons. Be very cautious of any franchisor who tries to discourage you from reaching out to other operators.