Franchise Resources

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Questions to Ask a Franchisor

While this is not meant to be an exhaustive list, these are important questions to ask the franchisor when you are considering buying a franchise. Talk to your franchising consultant about the answers and they can guide your further along the process.

1. What makes your brand more appealing than your competition?

There are often many franchisors in a given industry. What makes this one better? Let them sell you. You want to know the answer from two perspectives – a) what makes them more appealing to customers and b) what makes them more appealing to franchisees?

2. How many franchisees do you have in your company?

This will give you an idea of how tried and true their concept is and will also give you a sense of the size of your territory as a franchisee. Ask out what their expansion plans are – how many U.S. franchises do they eventually want to have?

3. What is the size of a territory?

Ask them specifically what it is now and if there is any guarantee that it will not get smaller. Is it in writing in the franchising agreement?

4. What is the cost of the franchise?

Find out if you can even consider it. Ask them how it compares it to others in the same industry and why. Then ask your franchising consultant to verify it.

5. How much liquid capital do I need to begin?

Again, this is a qualifying question. It tends to be similar by industry but it can vary.

6. Do you offer any financing options?

Many franchisees need financing. A franchise makes a bank loan easier to obtain than a business you start on your own, but you find that the financing offered by the franchisor fits your needs.

7. Confirm your royalty and national and fund fees.

There will almost certainly be royalty and advertising fees. Make sure you know what they are. Again, your franchise consultant can help you compare them.

8. Do you provide an earnings claim?

Some franchisors do, some don’t. If they do, get it in writing. Ask them the basis for the claim and how they back it up.

9. What specific training and support do you provide a franchisee?

These are keys to making sure a sound business plan becomes reality for you and that any earnings claim can come true. Obviously, the more training and support you get the better. Ask how much of the training is ongoing training and if there is a cost for you. Do they provide training just for the franchisee or also for the franchisee’s staff?

10. What marketing tools do you provide a franchisee?

Is it just national advertising or is there any local advertising and point-of-sale advertising? Are there marketing tools for the franchisee?

11. What is the time frame that you can begin the business?

Obviously, you need to know the time frame involved. It will vary by industry. It takes longer to research a location for a store and build it than it takes to get you started providing a mobile service.

12. What are the next steps in the process?

Regardless of their answer, the next step for you should be to consult with your franchising consultant. They can provide perspective on these answers and compare different companies for you, giving you valuable advice and help you avoid pitfalls and errors in communication with the franchisor.

About the author

Rob Bennett

Rob had served in the corporate-world for 18 years filling various technical capacities, from structural design to project engineer. His experience lends to FranFinders strategic planning, systems design and optimization.

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