What should I ask the Franchisor?

 

WHAT SHOULD I ASK THE FRANCHISOR? 

ABOUT THE FRANCHISOR: 

  • 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.   

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?  

 NEXT STEPS 

The International Franchise Association has over 1,400 franchisor members, representing 100 unique business categories, listed on our site.  If you are considering whether or not to go into business for yourself, but not by yourself, we are confident that you will find a number of franchise systems that might be a good fit for you.  To begin your search, visit our franchise opportunties section - click here 

 

For more information on the franchising business model, click here   

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