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12 Questions You Must Ask When You Interview Existing Franchisees

Even the most honest and forthcoming franchisor can’t tell you what it’s like to be a franchisee. You should take the time to call existing franchisees and get some candid answers to your questions. Be careful that you don’t get a limited list of hand-picked contacts. It would be a waste of time to talk only to the most successful operators or those who are coached to give the “right” answers. Calling franchisees at random will give you the clearest picture of what you’re getting into. Here are some questions you should ask:

  1. Are you happy with your franchisor? How is your experience different from what you expected?
  2. How long did it take for you to realize a return on investment?
  3. Approximately how much are you earning? Is it what you expected?
  4. How many hours a week do you spend working on the business?
  5. Did the training your franchisor provided really prepare you to run this business?
  6. Were there any hidden fees or unexpected costs?
  7. Are there restrictions on the products you sell and use in your business? If so, were you told of those restrictions beforehand?
  8. What do you think of the marketing and advertising? Does the franchisor advertise as much as you were promised it would?
  9. What kind of support do you receive now? When you have a problem, is your franchisor responsive or do you feel like you’re on your own?
  10. What did it cost you to build and start the franchise?
  11. Did your franchisor accurately estimate the start-up and operating cash you needed?
  12. If you had it to do all over again, would you choose the same business and franchisor?
Franchise Law for Beginners Part 2: The Implied Covenant of Good Faith and Fair Dealing

A duty to be fair or to be reasonable hardly seems to be unfair or unreasonable, but many franchisors and their attorneys believe that the implied covenant is dangerous or ill-advised and should be abolished. Their concern is that, by its very nature, a duty to act in “good faith” or to “deal fairly” or “reasonably” is inherently unclear.

Should Franchisors Consider Private Equity Investments?

How can you be sure it’s the right choice for you? We asked Glen Kaufman, Managing Director at American Securities, a private equity firm with a consistent track record in the industry. The middle-market firm invests in companies with revenues ranging from $100 million to $1 billion.

What Happens When a Franchise Contract Ends? Obligations Upon Termination

The franchise agreement should also address who gets to use the franchisee’s phone numbers after the franchise agreement expires. Traditionally, this right has belonged to the franchisor, but with home-based businesses becoming the norm, franchisors that allowed franchisees to use their home phones or existing cell phone numbers might have an issue regaining control of this component of their former franchisees’ business presence.