Have you decided to be your own boss by opting for a franchise? If yes, you must know that investing in a franchise is a major decision, so ensure to research every aspect conscientiously. Even if you have done your comprehensive due diligence and nailed down your options, it is crucial to know the people who run the franchise you are considering to purchase. Consequently, you should ask certain questions to your franchisor to ascertain the finer points of the business and make an apprised decision. Do you know what we call this process in the industry? It is called the ‘discovery process’. So in this article, we will unpack some consequential questions that you can ask your franchisor during the research process to make an informed decision.
Before you invest in any franchise and proceed with signing the agreement, you must know which type of business you can operate easily. For instance, if you have good entrepreneur skills of running an institute, then investing in a coaching franchise can be a suitable fit for you. After that, you need to do extensive research to invest in a franchise with a good brand image. Make sure to choose a franchise which is capable of sailing through economic slowdowns. After choosing the suitable option you should interview your franchisor to acquire paramount information.
Here is the list of questions you can ask your franchisor to gain viable information regarding the franchise:
Background of the franchise
The foremost step before stepping into a franchise is to know who are the founders of the business. Try to learn about the company’s initial setup and their purpose behind developing a franchise model. This will surely help you to gain an insight into the brand as a whole. Furthermore, you can know their future plans as well. Do you know why it is crucial to know the background of the franchise? It is because a bright future often depends upon a glorious past.
How much investment do you need to make?
We all are well acquainted with the fact that initial investment to commence a franchise can vary from a few thousand dollars to more than million. Franchise disclosure document (FDD) lists the initial franchise fee in item 5 and additional start up costs in item 7. From additional start up costs, we mean expanses on real estate, equipment, licenses etc. Therefore, make sure to discuss in depth with your franchisor regarding all these items. Doing so will give you a clear understanding of your investment.
What support do they offer
Most of the franchisors offer initial training to franchisees to get their business up and running. However, initial training is not enough, the majority of the franchisees want to attain ongoing support that may be unique than other similar franchisors offer. So, make sure to ask your franchisor about the level of support that will be available to you after opting a franchise. The list of questions to ask your franchisor regarding the support:
- Do you provide any ongoing training opportunities?
- Is there availability of on site assistance?
- What support staff will be accessible on a regular basis?
- Will you help me if I get into financial trouble?
What marketing will franchisor do for you
Franchisors usually convince their franchisees to make regular marketing contributions for marketing and advertising funds. If your franchisor tells you to deposit money for marketing, ask them how they will spend this money. Will they promote your business on a national level or will they just advertise it in your location. Make sure to have a clear sole proof of their intent to spend your money, preferably in writing.
What should I do to be a successful business owner?
Undoubtedly, your franchisor will properly guide you and give you an appropriate system to follow. However, if you require a specific skill set, then you can have a discussion with your franchisor over it. You can ask your franchisor some methods to become a successful franchise owner and act according to it. If he suggests you develop a network and build relationships in your community, you can utilize your time with people at local networking groups. This will build a clientele and your existence in the market. However, if your franchisor says to develop your team building skills, you can emphasize on it. Working solo and not liking delegating will surely end up in failure.
If you are planning to run an educational franchise, make sure to provide quality coaching in SSC CGL, IBPS clerk, SBI PO etc. Providing splendid coaching will make a strong reputation of your franchise and you can reach the height of success.
What will happen when the contract ends?
We all know that franchise agreements don’t last forever. The contract length varies depending upon companies which usually run for 5 to 10 years. Therefore, you must ascertain to ask what will happen at the end of agreement. Make sure to know if you are able to operate the business beyond this term or not. In general, you can ask your franchisor if they will provide an option to renew if you want to continue the business after the agreement ends.
Ask for the FDD and read it carefully
Before signing a contract ask your franchisor for the FDD. The franchise disclosure document has 20-30 pages. Make sure to read each and every page scrupulously because you will get to know the rules and regulations you need to follow throughout the contract. Additionally, it will contain the contact information of franchisees. You can contact franchisees with the help of information given in this document. Well, you can approach a lawyer to understand the franchise disclosure document carefully. A lawyer can help you in making the right decision.
To sum up, asking these questions to your franchisor might lead to some uncomfortable discussion. However, they are critical to make the right decision to invest in an appropriate franchise. We hope this article will help you in making an informed decision.