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Top Ten Questions To Ask When Exploring Franchises

Written by: Anne Barr

Article Overview: During the research and due diligence phase of investigation, there are numerous questions to ask both the Franchisor and the existing franchisees. After all, what better source of information than from those individuals currently operating that particular franchise model.

Top Ten Questions To Ask When Exploring Franchises

When considering any franchise opportunity, it behooves the prospective franchisee to ask lots of questions to educate themselves on all the pros and cons of the opportunity.

During the research and due diligence phase of investigation, there are numerous questions to ask both the Franchisor and the existing franchisees. After all, what better source of information than from those individuals currently operating that particular franchise model.

Below are headliners from each list:

Questions to Ask the Franchisor:
1.) What is the competitive advantage of your product or service?
2.) Who are your competitors and how does your business compare?
3.) What kind of support do you provide to franchisees?
4.) How will franchisees describe their relationship with the franchisor?
5.) How many of your franchisees have gone out of business or left the system in the last 2 years and why?

Questions to Ask the Franchisees:
1.) How long have you been a franchisee? So far, are you happy and would you do it again?
2.) How would you rate your on-going support? If you need assistance, do you get it easily?
3.) How do you rate the marketing, advertising, and promotional programs?
4.) How difficult is it to find, train and retain employees?
5.) What is the main function of the owner of the business? Could you please describe a typical day?

Obviously, there are many more questions on each list. Another very important area is the “financial performance representations” (formerly called “earnings claims”). The Federal Trade Commission “allows” franchisors to make these representations, but are not mandated to do so. The FTC also states in preambles to Item 19 of the Franchise Disclosure Document that “prospects should not rely on unauthorized representations”.

Related Articles
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  Franchising FAQs
  Low Cost Franchises Offer Way to Own Your Own Business
  Reasons to Consider Franchising
  SME's - why is franchising not more popular in Africa

Article Tags: due diligence, entrepreneur, franchise ownership



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franchisebrief.com good clean design - I actually really like the design - it's clean and not busy. The information is easy to find. You mentioned you didn't want to monetize from the site thru the use of adwords but what about JV'ing with all or most of the Franchises you are referring people to. Is that possible in the Franchise industry?
Re: Franchise Support. What is it to you? - To be honest I have never been a big believer in Franchises. Which of them did you have the best and worst experience with, when you called in as an "interested buyer"?
Clothing Franchises - I believe that there are quite a few franchises for larger brands such as Diesel, Lacoste and Bennetton etc... but I am not sure how these contracts work. In New Zealand, Canada & Switzerland Clothing Franchises are for smaller designer brands & Outdoor clothing -- such as Bivouac, the great Outdoors etc Ian
Re: Marketing ideas? - Questions will set you free... And make you Rich [quote="KH_Global":349pds7c]Just ask ask ask. That is it.[/quote:349pds7c]
Top performing Franchise Loans - Evan, There are over 120 Franchises listed by the SBA with 0% Loan Failure from 10-1-00 to 9-30-05 these companies have at leat 10 loans disbursed. A number of the companies are Hotel/Motel Franchises so I listed them separately. Since all the ones listed have 0% loan failure I listed them descending by # of loans disbursed. Top 20 (by # loans Disbursed) 0% SBA Loan Failure (does not include hotels/motels) 1 21425--CULVER'S FROZEN CUSTARD 85 2 66910--PRIMROSE SCHOOL (DAYCARE) 76 3 14467--CARTRIDGE WORLD STORES 54 4 68021--QUIZNO'S SUBS 41 5 06560--AUNTIE ANN'S (SOFT PRETZELS) 40 6 29912--FIREHOUSE SUBS 35 7 31154--FOOT SOLUTIONS 35 8 52707--MEDICAP PHARMACY 35 9 09802--BEN & JERRY'S ICE CREAM 33 10 67759--COMFORT SUITES 33 11 70150--RITTER'S FROZEN CUSTARD 32 12 05650--ARBY'S 31 13 65160--PLATO'S CLOSET 31 14 67417--PUMP IT UP 30 15 69149--REMAX 30 16 71456--SALAD WORKS, INC. 30 17 76282--SONIC DRIVE-IN 27 18 84725--UNION 76 OIL 27 19 17049--CHRISTIAN BROTHERS AUTOMOTIVE 26 20 78950--SUNOCO SERVICE STATION 26 Top 10 0% SBA Loan Failure Hotel/Motels 1 10275--BEST WESTERN INN 104 2 67750--COMFORT INN 98 3 38605--HOLIDAY INN EXPRESS 87 4 36680--HAMPTON INNS 57 5 53165--MICROTEL 33 6 75385--SLEEP INN MOTEL 26 7 04160--AMERIHOST INN 18 8 69134--RED ROOF INN 13 9 17230--CLARION INN & SUITES 11 10 20715--COUNTRY INN 11


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