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WHAT SHOULD I ASK THE FRANCHISOR?

ABOUT THE FRANCHISOR:

  • Does the franchisor staff attend seminars on franchising and management?
  • Do field consultants offer help and guidance or merely act in a regulatory role?
  • How many franchises are expected to be added each year?
  • Where will they be located?
  • What is the success rate of existing franchises?
  • What method is used to protect franchisees from poorly performing franchises?
  • Is there a franchise owners association?
  • Is there a franchise advisory council?
  • Who owns the trademarks, service marks, etc., and are they federally registered? 
  • Are there any disputes pending or threatened against the trademark. 
  • Has the franchisor complied with the FTC and state disclosure laws?
  • Are any senior management or key personnel leaving the system?
  • Does this company compete with the franchisees in the marketplace?
  • Will the franchisor finance any of the costs?
  • Is the franchisor willing to negotiate the terms of the franchise. 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

ABOUT COSTS:

What is the total investment required to own a franchise?

  • franchise fee
  • furniture, fixtures, and equipment
  • leasehold improvements
  • lease deposits
  • other deposits
  • franchise training
  • travel expense
  • supplies
  • advertising and brochures
  • grand-opening advertising
  • inventory
  • pre opening staff costs
  • working capital until breakeven
  • working capital - living expenses
  • other

What are the continued financial costs, the basis used for calculation, method of payment and frequency of payment?:

  • royalties
  • advertising

Must the franchisee purchase products or services from the franchisor?:

  • Does the franchisor earn income on purchases?
  • How much does the franchisor earn?
  • How are the products distributed?
  • How long does it take for the orders to be filled?
  • What other initial or continuing services does the franchisor provide?  What do these costs?

ABOUT CONSUMER
RESEARCH AND MARKETING:

  • What type of consumer research has the company conducted. 
  • What were the results?
  • Has the franchisor conducted any market studies on the territory to ensure that it can support a franchise?
  • What are the demographics required to support a franchise?
  • What are the traffic counts required to support a franchise?

ABOUT TRAINING:

  • What are the location, duration and additional costs of initial training?
  • Who must attend the training?
  • What is the cost of additional staff attending training?
  • What is the training curriculum?
  • Who conducts the training and what are their backgrounds?
  • Who pays for transportation, room and living expenses?
  • Does the franchisor provide training materials for training new staff in addition to the operations manuals?
  • Does the franchisor provide hands-on assistance during the pre-opening, grand opening and initial period?  Of what type, duration and cost?

ABOUT PRODUCTS AND SERVICES:

  • Are there any new products or services under consideration for addition to the franchise?
  • When are they going to be introduced
  • what is the estimated additional cost for adding the new products or services?
  • Are there any restrictions on the distribution or sale of the product?
  • Is there a guarantee or warranty program?
  • How is it administered and what is the cost?
  • Is there a minimum that must be purchased?

ABOUT OPERATIONS:

  • What are the roles and responsibilities of the field staff?
  • How many locations does each franchise consultant work?
  • What is the background of the franchise consultant I will be working with?  Can I meet that person before purchasing the franchise?
  • How often does the field staff visit a franchisee's location?
  • What is the additional cost of field services if the franchisee requires it?
  • Exactly what kind of assistance is given?
  • What kind of supervision or quality control is there?
  • What, if any, is the charge for assistance?
  • What kind of business management systems are provided to boost sales and profits?

ABOUT ADVERTISING
AND MARKETING:

  • What type of consumer advertising does the company recommend?
  • What types of cooperative advertising programs are being used?
  • What percentage of sales is recommended or required for advertising or marketing?
  • How do the franchisees obtain their sales leads or customers?
  • What is the franchisor's national/regional advertising program and budget?
  • What portion of the national/regional advertising contribution is used for administrative/corporate/agency expenses and fees?
  • What are the primary advertising/marketing vehicles?
  • What is the grand opening advertising program and cost?