What Questions To Ask A Franchisor | SkillsAndTech

When considering a franchise opportunity, it’s important to do your due diligence. After all, you’ll be investing your time and money in the business, so it pays to ask questions—lots of them. This way, you can ensure that your investment will be a success.

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You should ask questions of any franchisor you are considering to ensure that the agreement is a good fit for both you and the company. To help make sure you get all the information you need, we have compiled a list of the most important questions to ask.

Read on to find out the top questions to ask a franchisor before signing on the dotted line, as well as why you should ask those specific questions.

What Questions To Ask A Franchisor?

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Here are the key questions you should ask a franchisor before signing any agreements:

When Were You Established And What Is Your Track Record? 

The first thing you should ask is how long the business has been in operation and what its track record looks like. This information can give you an idea of the company’s longevity, financial stability, and customer satisfaction levels.

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For example, a company that has been around for several years and is still doing well would be seen as a more reliable investment than one that is new to the market. Similarly, a company with a solid track record of sales and customer satisfaction is likely to be more successful than one without such records.

What Is The Success Rate Of Your Existing Franchises?  

It’s essential to ask the franchisor about their success rate when it comes to existing franchises. Knowing how many of your peers have been successful will give you a good idea of what kind of financial return you can expect and whether or not the franchise opportunity is worth pursuing.

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Ideally, the franchisor should be able to provide you with figures that cover both recent and long-term success rates. This will allow you to get a better idea of the franchise’s current trajectory.

What Are Your Criteria For Choosing Franchisees? 

The franchisor should be able to clearly tell you their selection criteria for choosing franchisees. This will give you an idea of whether or not the company is a good fit for your skills and experience, as well as if they are looking for specific qualities in potential franchisees.

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Some of the main criteria to consider are the franchisor’s understanding of your goals, expectations, and requirements for franchisees and the type of person they think would make a successful franchisee.

How Much Does The Franchise Cost? 

No matter how great a franchise opportunity might look, if you can’t afford it, then it’s not worth your time. 

You should ask the franchisor upfront what fees and expenses are associated with the franchise. This includes initial fees, ongoing royalties, or profit share payments, as well as any additional expenses that you may need to consider.

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It’s also important to ask the franchisor if they provide any financing options, such as loans or grants, which can help make the franchise more affordable.

What Support Do You Offer Franchisees? 

Good quality support is essential for any successful franchise. You should therefore ask the franchisor what type of support they offer to their franchisees. This includes training, marketing materials, business advice, and ongoing operational guidance. The type of support you need will depend on your goals and experience level.

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Ideally, the franchisor will be able to provide you with a detailed explanation of the support they provide and how it will benefit you.

Where Will My Franchise Be Located?

The location of your franchise is important for a variety of reasons. It will determine the types and numbers of potential customers, as well as how easy it is to find and access the premises. 

For example, if your franchise will be located in a shopping mall, it’s important to know how much foot traffic the area receives and whether or not there is adequate parking.

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You should also ask the franchisor about their plans for expanding the business into other locations. This can give you an idea of where your franchise may be located in the future and any potential growth opportunities.

What About Ongoing Fees? 

Franchises often involve ongoing fees and expenses, such as royalties or profit share payments. You should ask the franchisor what fees you can expect and how frequently they will need to be paid. Knowing this information can help you plan and budget for the future.

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It’s also important to ask if there is any flexibility when it comes to fees, such as discounts or incentives. This could potentially help you to save money in the long run.

How Do You Protect Franchisees From Poorly Performing Franchises?

The success of a franchise depends on the franchisor’s commitment to protecting its franchisees. As such, you should ask them what measures they take to prevent poorly performing franchises from dragging down the performance of other franchises in the network.

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This could include providing regular performance reviews and feedback, as well as offering guidance and support to struggling franchisees. The franchisor should be able to provide you with a clear explanation of how they protect their franchisees.

Can You Tell Me More About Your Franchisee Training Program?

Franchisees need to be properly trained and supported in order to succeed. You should ask the franchisor about their training program, as well as how often it is updated.

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This will give you an insight into how much of an emphasis the franchisor puts on helping its franchisees achieve success. Ask them what kind of resources they provide franchisees with, such as online training materials, business coaching sessions, and mentorship programs.

Will You Provide Extra Financial Assistance If Needed?

Franchises can sometimes run into financial difficulties. You should ask the franchisor if they offer any kind of extra financial assistance to their franchisees, such as loan guarantees or special financing options. If not, then they can at least provide lender recommendations or support via the SBA (Small Business Administration).

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Knowing what kind of financial assistance the franchisor provides can help you make an informed decision about whether or not a franchise is right for you. Plus, this will give you an idea of how much support the franchisor is willing to provide in difficult times. It’s always better to be prepared.

How Do You Resolve Disputes Or Disagreements?

When deciding on a franchise, it’s important to make sure that there is an adequate dispute-resolution process in place. Ask the franchisor about their policies for resolving disputes or disagreements between franchisees and the franchisor.

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The franchisor should be able to provide you with details of their arbitration policy, as well as any other measures they take to address disagreements. This will help you make sure that there is an effective system in place should a dispute arise.

Are There Any Restrictions On The Sale Or Distribution Of Products Or Services?

A crucial question to ask the franchisor is whether there are any restrictions on sales and distribution. This could include regulations on geographic territories, product types, or pricing.

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The franchisor should be able to provide you with a clear explanation of how they handle these matters. They might even have policies in place to ensure that all franchisees adhere to the same standards. Asking this question will help you make sure that you understand the restrictions before agreeing to become a franchise owner.

What Type Of Consumer Advertising Do You Recommend?

Consumer advertising is an important part of a successful franchise. Ask the franchisor what type of consumer advertising they recommend, such as print ads, radio spots, or digital campaigns. This will give you an idea of how much support the franchisor provides regarding customer acquisition and retention.

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It’s also worth asking the franchisor if they provide any form of co-op advertising. This could be in the form of funds for local or regional campaigns or even national campaigns that are designed to drive awareness across a wide area.

How Do Other Franchisees Obtain Their Customers Or Sales Leads?

This is an important question to ask, as it will give you an insight into how the existing franchisees are achieving success. Ask the franchisor whether they have any recommendations for obtaining customers or sales leads. They might suggest online advertising campaigns or even offer additional support for local marketing efforts.

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By understanding how other franchisees are obtaining customers, you can create a successful customer acquisition plan that is tailored to your franchise. This will help you remain competitive in the market and ensure that your business has access to enough customers.

How Much Can I Expect To Profit?

Finally, it’s important to ask the franchisor about their projections for your potential profits. This will give you an idea of how much money you can expect to make from running a franchise. While the exact figures may depend on several factors, the franchisor should be able to provide some general estimates or data points.

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It’s important to bear in mind that these figures are only estimates and will likely vary depending on your own performance.

Bottom Line

Asking the right questions is essential if you’re considering entering into a franchise agreement. Before making a decision, it’s important to ensure that you have all the information you need about the business model, support structure, and legal obligations.

By asking these 15 questions, you can get a better idea of what to expect when you become a franchisee.