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Asking the Right Questions Before Beginning a Franchise

Written by: Michael Hemenway

Article Overview: When you are starting a franchise, it pays to play the part of that annoying kid who asks thousand and one questions! But each question should be relevant to find out whether the franchisor actually knows how to franchise. So, ask about its vision and mission statement as well as the training and support you are entitled to get from your franchisor.

Asking the Right Questions Before Beginning a Franchise

Starting a franchise is the decision of a lifetime. So, it’s very imperative that you take it after long consideration and thorough investigation. There are many franchise opportunities in the market; but there will be only one that will be perfect for you. Hence, be very critical during the due diligence process and ask the following questions to the franchise concepts whose franchise business for sale offers have interested you the most.

How long have you been in the business?

A franchise business is all about transferring the franchisor’s accumulated business sense to the franchisee. So, how many years the franchisor has taken in perfecting the business model is vital when it comes to the question of success. Generally, a franchisor should start offering franchise business for sale only after it has established a market presence. So, checking out the time-period your franchisor has taken in creating a market for the product/service is essential.

What is your vision and mission statement?

A franchisor is supposed to be the leader of the franchise system. And every leader should have a clear picture of where he is going. When you go for starting a franchise, it’s a long term commitment from your part. Hence, knowing that the franchisor has envisioned a bright future along with a perfect system for you is very necessary. Similarly, every business should have a core value, which cannot change under any circumstance. Becoming aware of the mission statement of your franchisor will help you to judge whether its values and business practice is finding resonance with your principles. If they clash, neither you nor your franchisor will benefit from this sort of association.

How much support and training are you giving?

People buy a franchise because they don’t want to be in the business all by themselves. The extensive support and training provided by the franchisor is the reason why franchise business has lower failure rate than stand-alone businesses. Hence, be very careful when you are inquiring about the support and training programs that you will get from the franchisor. Make sure that you get effective property lease and negotiation assistance when you are starting a franchise. The initial training will help you to learn everything about the business model of the franchisor. Also, ensure that the course materials of your initial training program are comprehensive enough, so that you can understand and implement them properly in your location.

Are you giving financial assistance?

Many top franchises in the business offer financial assistance to the people wishing to buy a franchise from them. If you franchisor is offering help in this matter, then it will save you a lot of time and hassles. Some franchisors that are registered as small business franchises get preferential treatment, if you apply SBA loan for buying them. Moreover, some franchises are pre-approved for SBA loans, making the loan process easier while some have tie-ups with lenders and financial institutes. Then there are franchisors that help in developing a killer business plan, which also helps you to get loans easily. So, don’t forget to ask which of these supports your franchisor is providing you with.

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Article Tags: bright future, business for sale, business model, business practice, business sense, circumstance, core value, due diligence process, failure rate, franchise business, franchise concepts, franchise opportunities, franchise system, franchisee, franchisor, market presence, mission statement, perfect system, resonance, term commitment



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Re: Enticing Franchises - Top 9 List - All Franchise listed above are in millions of dollars. Do you have the list of Franchise in thousands
Re: Info for would be franchisers... - [quote="Sebastien":1d29sdv1]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to. I just want to mention that all these magazines are NOT franchisee oriented. I mean these magazines are for franchise professionals. If you're looking to buy a franchise, you won't find much information in there. To answer your question, getting published in Franchise Times was fairly easy. I don't want to brag too much but I think I am known in the franchise industry. I was the marketing guy at Franchise.com for a few years before joining my new company, the World Franchising Network. So people know me and I have a very good relationship with Nancy Weingartner, the Managing Editor at Franchise Times. I was talking with her at the last Franchise Expo South in Miami and she mentioned she'd like me to be profiled. I was like "ok, sure!". I like this franchise executive profile thing in Franchise Times as it is rarely BS. People are usually really natural in there.[/quote:1d29sdv1] Thanks for the follow up Sebastien! And I can't say that I'm surprised that networking with the right people and managing your relationships with them properly are the keys to being published. I guess the old adage holds true of "it's not who you know, but who knows you" that's important.
how much for a franchise fee? - Dear Colleague There is no easy answer to this question. Things to consider: [list=] The sizeof the Franchise Clent base Expected Turnover Intellectual Property costs (recoup) Number of Franchises Number of employees Original Set up costs Franchise admin costs An example: A franchise that I was involved in setting was to a simple "lawn mowing/home repair" franchise. The Franchise included national/local advertising - preparation of client lists - general admin - central accounting etc The Franchise involved 300-500 clients - and an annual turnover of about $300,000 . The annual franchise fee was $30,000. Hope that this gives you some idea Take care Ian[/list]
Re: Franchise Surveys - Another good tool to researching a franchise is to speak with their existing franchisees. This contact information is included in most Franchise Disclosure Documents. In order to get a Franchise Disclosure Document or FDD as it is often referred to, you will have to complete a basic franchise application. The franchisor will then usually provide you with the FDD at that time. Included in that book of information is a list of the existing franchisees, the contract, the investment information etc... This information is required by Federal Law to be disclosed to your prior to making a purchase. So be sure to do your research and start with the Franchise Documents to get the initial information.
Re: Info for would be franchisers... - [quote="Sebastien":2gam0klq][quote="BuzzAroundBooks":2gam0klq]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to.[/quote:2gam0klq][/quote:2gam0klq] That is really what I look for in any industry publication. We lead busy lives and when people fill their magazines with fluff, not only does it benefit no one, but it makes us truly appreciate those that don't. Thanks!


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