[mage lang=”en|sp|en” source=”flickr”]sample franchise agreements[/mage]
Potential Franchisees: 5 Key Questions To Ask The Franchisor
Youâve had your eye on that cool franchise business for a while, and youâre finally ready to move forward and become a franchisee.Â Congratulations on your decision to take control of your future!Â You are showing your desire to be a leader, and someone who wants to be their own boss.Â That takes confidence, courage, and discipline.Â Before you buy, however, you need to ask some specific, key questions of the franchisor.Â
Becoming a franchisee is similar to a marriage, in that your committing yourself to someone long term, and if itâs done correctly, both parties are successful.Â For that to happen, though, you must know your partner really, really well first.Â That means asking some direct, sometimes tough questions relative to the business.Â Exactly what questions are important to ask, though?Â A good franchise consultant can provide an entire list of questions you should not only get answers to, but be very comfortable with the answers you receive.Â
Here is a sampling of some top questions that need asking:
1.Â What type of support will the franchisor provide once your franchise has opened its doors?Â Â One of the top reasons to buy a franchise is for the excellent support provided.Â If youâre not satisfied with the answer to this, move on to another opportunity.
2.Â What types of territorial restrictions and protections have been set up by the franchisor?Â Key question.Â You most definitely need to, and want to, know the exact size of the territory you are awarded and its boundaries.Â This must be specifically defined before a franchise agreement can be reached.
3.Â What arrangements are established through the franchisor in terms of product supply?Â Most every franchisor will require you to purchase your products and/or services from an approved, specific vendor.Â You may be able to âfill inâ with, say, a local supplier in between orders if you run low on an item, but for the most part, youâll be doing business with a vendor that has been pre-established by the franchisor.
4.Â How many franchisees have failed and why did they fail?Â Ideally, your franchisor will speak candidly about what exactly it takes to wildly succeed in their business model, and also what some franchisees have done (and what you should steer clear of) to completely screw it up.
5.Â How much time am I required to devote in my business on a daily/weekly basis?Â A few new, ill-prepared franchisees have been quoted as saying âI feel like I live here Iâm here so muchâ and â I had no idea Iâd be putting in 75 hours a weekâ.Â Almost always, there is one of two reasons for these statements.Â One, and most likely, itâs a result of poor time management on the part of the franchisee.Â Second, the question of time commitment was never asked of the franchisor.Â Either way, its poor execution or implementation by the new business owner.Â
These questions are for starters and the franchisors’ willingness to cooperate in answering them should help you judge their sincerity. There are numerous other questions I provide my clients with that need answering before an informed decision can be made.Â Existing franchisees are often a more productive and responsive group to speak with, and Iâll discuss specific questions for them in another article.
About the Author
Cory Barber is a professional franchise consultant affiliated with the world’s top franchise broker network. His free, confidential consulting services help guide you through the entire process of purchasing a franchise based on your background, skillset, lifestyle, and financial goals. For more information about his free Franchise Consulting Service contact Cory at his office: 877-271-4305.