So You Want To Buy A Franchise? The Top Questions You Should Ask Yourself and Any Future Franchisor
When considering prospective franchises, it’s important to know the right questions to ask to get all of the details necessary to make an informed decision about your purchase. Researching the background of your franchisor, and determining the support and assistance they will be able to offer you as you get started are just two key elements that you will want to consider before you sign any contracts.
Have you and your lawyer looked over all of the franchise documents, and feel that the terms and conditions are fair and equitable? Do you understand all of the terms and conditions set out in the contract? Do you feel comfortable signing the contract?
Will you have exclusive territory rights for the duration of your contract, or is there a risk that your franchisor will allow other businesses to start up within your chosen area?
What will happen if you want to end your contract? Are there penalties involved, or are there circumstances under which this is acceptable?
Are there any requirements within your contract that would encourage you to engage in illegal or questionable practices? This is a huge red flag that you shouldn’t be involved with the business.
How many years has your franchisor been in business, and how many other franchises do they have within their chain?
What kind of support will you receive as a new franchisor, and then as an established franchise? Is there training, upgrading, and emergency support available? Are there a series of scheduled visits throughout the year?
Have you had an accountant review all of the figures released by the franchisor, and have these numbers been independently verified?
What kind of reputation does the franchise have within the business community? Also, can you speak with other franchisees to see how they feel about working with the company?
How much money will be required to purchase a franchise, and keep it running until it turns a profit?
Has the franchisor investigated franchisees thoroughly enough? You will want to ensure that they are doing their part to hire qualified people on their teams to maintain brand standards before buying a franchise from the company.