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”.
Top Ten Questions To Ask When Exploring Franchises - To learn more about this author, visit Anne Barr's Website.
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Anne Barr
(Visit Anne's Website)
Anne Barr has over 26 years experience in
sales and marketing, six years as a
franchisee. She has assisted over 367
business owners and purchasers to achieve
their goals in career change, transition
and exit strategy. She holds the
designation of Certified Franchise
Executive from the International Franchise
Association, Certified Business
Intermediary from the International
Business Brokers Association and Board
Certified Broker from the Texas
Association of Business Brokers. Anne is
active in professional organizations,
networking groups and volunteers for
non-profit entities. As owner/operator of
four successful businesses, Anne has
proven people skills and enjoys helping
clients find the right "fit" in business
ownership. Visit www.FranchiseOpportunitySpecialist.co
m for more information about me and my
company.
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