Here are 11 commonly asked questions that are asked by potential franchise candidates. Note that there are no standard answers for any question. Answers can vary dramatically from one franchisor to another. Please use this as a basic guide.
How much capital do I need?
While the franchisor will give you guidelines, many candidates get hung up on an absolute number that is provided by the franchisor. Just remember this: it usually takes more capital than you would expect to start any business. While a franchisor has the knowledge of many others who have gone before you, please do not underestimate the number.
Do I need to have a good credit score?
Probably yes. Even though you may be able to convince the franchisor that you have sufficient capital, experience, and knowledge to start the business, there will be other related business dealings that will require a good credit standing. Think about trying to open a bank account, trying to borrow money, signing a property lease, etc.
Do I need experience in running my own business?
It varies. Many very basic opportunities require no prior experience whatsoever. In fact, that can become a major advertising pitch for many. Others may require a great deal of experience and business savvy.
Do I need knowledge of my desired industry?
Reference above, once again, this really can vary.
Do I need to use a Franchise Broker?
Absolutely not, franchise brokers can add value however. They can help screen potential franchise candidates. They can also coach you on the proper do’s and don’ts during the application and approval process. Just keep in mind that franchise brokers may only represent a select few franchisors. Online web portals, such as The Business Market, can provide an easy way to search for existing franchise opportunities. They will likely have a very large number of listings relative to what a broker will represent.
Can I operate my business from my home?
Sometimes yes. However most franchise opportunities require a business location. Many are retail related.
How long does it take to open?
Expect the entire process to take anywhere from 60 to 180 days.
What type of training and support do you provide?
Everyone brags about their unsurpassed training and support. The truth is, most do an excellent job of providing proper training. And if you think about it, it is in the franchisor’s best interest to provide ongoing support. If you prosper, then they will prosper through the collection of royalty payments from you. After all, they have their reputation and name on the line.
What is a “Discovery Day?”
A Discovery Day is a day devoted to you at the franchisor’s headquarters. You will spend time with key managers and trainers, learning about systems and how the franchisor will help you succeed in your business.
Will I have a protected territory?
Almost definitely, that is one of the big selling points for any franchisor.
Will I have to pay ongoing royalty fees?
Absolutely, this is the primary reason that any franchisor would want to franchise their opportunity in the first place.
Note that many low cost opportunities are not really franchises, but they are considered Business Opportunities (BizOps). BizOps are very unregulated and usually have a very small entry cost. There are no ongoing royalty fees with a BizOp. Many are home based. However, be careful when choosing a BizOp. Make sure that the opportunity is tried and proven.
There are exceptions of course. Many larger companies offer BizOps. One example is Sign Biz, Inc. They have been around since 1989 and have over 170 existing locations.
FAQ's for Starting a Franchise - To learn more about this author, visit Tom Parsley's Website.
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