Franchisor Questions

Refining your Search to Find the Right Franchisor

The questions below are a great start on what to ask a franchisor when you speak or meet with them. Or you can use them to look for answers in any information they send you. There are many
different types of franchises so you may have to tailor these questions to suit the specific franchise.

Questions for Franchisors

How long has the company been going?
When did you start franchising?
How many franchisees do you currently have?
What is the franchise fee?
What are the required set up costs on top of the franchise fee that are needed to start the business?
How much working capital do you think is needed? What is the total investment?
Are there any other major costs I can expect, or need to be aware of?
Can you help me with, or give me any estimated sales projections?
What is the duration of the franchise agreement, and what terms apply to renewal?
How long will it take to start selling from the time I sign the Agreement?
What will training consist of, how long will it last and are all training costs included in my franchise fee?
What ongoing support do you offer – both proactive and reactive?
How long should it take me to reach break-even?
What is the earning potential?
Can you provide an example of the revenue and profitability of a typical franchisee?
What are the ongoing royalties and how are they calculated?
Do I have to contribute any other costs, such as national marketing campaigns or promotional expenditures? If so, how much?
Is there a requirement to purchase any specific products or materials?
What is the associated marketing mix for your product or service and what help, if any, will I receive if I want to do some advertising and promotion on my own?
After I have opened, what ongoing support will I receive, and how often?
What is the size and experience of the franchise support team?
What help and guidance do you offer regarding the working/office space? e.g. can the business be run from home? If the business requires retail, office space or storage, will you help me select it?
When can I receive a full list of all franchisees in the network, and when can I contact them?

Do you provide instruction and, or, operational manuals? If so, can I see/review them prior to joining your network?
Have any franchisees failed, and if so, why?
What is your process to vet prospective franchisees to maintain a high standard in the network?
Will the territory offered be for my sole and exclusive use for your brand, service or product?
Do you have availability in my area, and what are the customer demographics in it?
What criteria is used to calculate the size and scope of the franchise territories?
Have you had to handle grievances with existing franchisees, and how do you deal with them?
What happens in the event I am incapacitated for any period?
Are there minimum performance targets in the franchise contract? If so, what are they, and if I struggle to meet them, how will you help me? If I don’t meet them, what are the consequences?
Does your company see any threats in the current marketplace?
How have your business and franchisees’ businesses handled recent economic conditions?
Where do you see the overall franchise business and network in 5 years time?
How many franchisees have renewed their franchise agreement?
Have any franchisees successfully sold their franchise?
If I wish to sell or close my business before the end of the agreed term, what is the process?
Can I see a copy of your franchise agreement?
What is the ongoing support process of the business after the initial training?
Do you require franchisees to submit business figures and, if so, how often and by what means?
Do you feed back any network figures or percentages to franchisees so others can see how they’re doing in comparison to others?
What type of backgrounds have your current franchisees come from?
How many franchisees do you expect will be operating when the network has reached maturity?

Researching a Franchise

There are thousands of registered franchise opportunities to choose from in the US and that number rises every year.

Given the numerous options, it’s helpful to write a wish list of what you want to achieve through running your own business, so you ultimately can find a franchise that best matches your requirements. Following the logical steps below should help you do that and refine your search against what you want and what you can afford:

Budget (Total Investment = franchise fee, set up costs and working capital)
What do you want from your business / franchise?
What will suit you, your family or those around you?
Research the industry sector? (be careful of fads)
Meet or speak with at least 2-4 franchisors
Evaluate a franchisor’s information and their people you meet along the way.
Test the franchise to destruction (check sensitivities)
Make your decision
Believe in it and yourself, and go for it!

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