10 Questions to Ask Yourself and Your Future Franchisor
When considering prospective franchise opportunities, it’s important to know the right questions to ask to get all of the details necessary to make an informed decision about your purchase. Researching the background of your franchisor, and determining the support and assistance they will be able to offer you as you get started are just two key elements that you will want to consider before you sign any contracts.
- Have you and your lawyer looked over all of the
franchise documents, and feel that the terms and conditions
are fair and equitable? Do you understand all of the terms and conditions set
out in the contract? Do you feel comfortable signing the contract?
- Will you have exclusive territory rights for the duration of your
contract, or is there a risk that your franchisor will allow other businesses
to start up within your chosen area?
- What will happen if you want to end your contract? Are there penalties
involved, or are there circumstances under which this is acceptable?
- Are there any requirements within your contract that would encourage you
to engage in illegal or questionable practices? This is a huge red flag that
you shouldn’t be involved with the business.
- How many years has your franchisor been in business, and how many other
franchises do they have within their chain?
- What kind of support will you receive as a new franchisor, and then as an
established franchise? Is there training, upgrading, and emergency support
available? Are there a series of scheduled visits throughout the year?
- Have you had an accountant review all of the figures released by the
franchisor, and have these numbers been independently verified?
- What kind of reputation does the franchise have within the business
community? Also, can you speak with other franchisees to see how they feel
about working with the company?
- How much money will be required to purchase a franchise, and keep it
running until it turns a profit?
- Has the franchisor investigated franchisees thoroughly enough? You will
want to ensure that they are doing their part to hire qualified people on
their teams to maintain brand standards before buying a franchise from the
Desperate Times Means Desperate Franchise Buyers
Early in my career, I encountered a franchise buyer who had made a rash decision that turned sour quickly. The funny thing was that he was intelligent, experienced and had a great deal of corporate knowledge – all the attributes that franchisors desire for their many franchise opportunities. I was intrigued that this experienced and generally deliberate person would make such a bad decision. So what went wrong?
5 Steps to Getting Started in Finding the Right Franchise
Here are 5 steps to get you started off on the right foot:
Why Do Companies Franchise?
The most successful entrepreneurs, however, eventually come to recognize that achieving long-term success requires that they step back and put in place the right systems, processes, and people to expand their company beyond what any one individual -- no matter how motivated and sleep deprived -- could possibly manage on his or her own. Once a business owner sees what's possible when employees take on operational responsibilities that free management to actually manage instead of act like their own employee, he or she quickly understands the enormous power that scalability means for a business.