Let's Play 20 Questions About Franchising

If you are not going to use a Franchise Consultant (silly you) then you should be sure to ask plenty of questions of both the Franchisor and some of the existing Franchisees.

I reckon that these are the top 20t:

Questions to Ask the Franchisor:

1.) What is the competitive advantage of your product or service?

2.) Who are your competitors and how does your business compare?

3.) What kind of support do you provide to franchisees?

4.) How will franchisees describe their relationship with the franchisor?

5.) How many of your franchisees have gone out of business or left the system in the last 2 years and why?

Questions to Ask the Franchisees:

1.) How long have you been a franchisee? So far, are you happy and would you do it again?

2.) How would you rate your on-going support? If you need assistance, do you get it easily?

3.) How do you rate the marketing, advertising, and promotional programs?

4.) How difficult is it to find, train and retain employees?

5.) What is the main function of the owner of the business? Could you please describe a typical day?

There are stacks more questions to ask. Do not be embarrassed> You are not just being a pain in the neck, and if you are, so what! You need all the information you are asking for.

 Another very important area is the "financial performance representations" (formerly called "earnings claims"). The Federal Trade Commission "allows" franchisors to make these representations, but are not mandated to do so.

The FTC also states in preambles to Item 19 of the Franchise Disclosure Document that "prospects should not rely on unauthorized representations".



 

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