Questions to Ask a Franchisor
So you are interested in becoming a franchisee and you are starting to discuss things with a potential franchisor (or hopefully, a list of franchisors in the industry that you are generally interested in). Congratulations on making the first move and showing the initiative to become a franchisee now you are going to need to do a lot of research into the franchise process as well as the specific franchises that might be well suited to you and your business goals. What kinds of questions do you need to ask of the franchisors that you are thinking about investing in for your new business? Here are some of the questions which you should keep in mind during the interview process.
One of the first questions that should be on your mind as you begin the interview process is what kind of expansion the franchise is currently undergoing. The franchisor should be open about the current rate of expansion that the company is seeing, both as a whole and in your particular territory. You can probably begin to find information about this by doing a search on the world wide web for articles about the company web sites which follow current business news are likely to have information about whether the franchise that you are considering is going up or down in the world and whether they are opening or closing stores as a result. Get the basic information about your franchise as part of the initial selection process and then look for specific information when you start to ask questions of the franchisor.
You should ask the franchisor about the kinds of profits that you can realistically expect to have at the end of the first year, at the end of the first six months, etc. You should be able to get an estimate of how long it will take to turn a profit on the monthly accounts of your business and how long it will be before you start to turn a profit on your original investment. A well established franchise company will be able to tell you the average figures for all of these things and give you a strong sense of what kind of time frame you are talking about when it comes to profits and getting the business on its feet. You will be able to determine what kind of financial future you will have if and when the business that you are thinking of investing in becomes a success.
Also ask the franchisor about the expenses of the business what are the major sources of expense that most franchisees have to deal with? What are the average total expenses of running the business? You should have been reading as much as possible before this point, including whatever information sheets and investment materials that the franchisor company provides to potential franchisees. As a result, you probably have some general numbers on which you can start to base a business plan now, you will need more specific numbers which are tailored to your part of the country and your situation in order to progress your plan. The franchisor representative that you speak to in the meeting should be able to give you a more specific sense than the generic sales materials for the franchise, but dont be surprised if there is a level of estimation involved in this as well every situation is a little different!
The franchisor will have had a lot of experience with different people trying to run the business, and will be able to tell you about the areas where franchisees have had problems in the past try to identify the key areas in which franchisees have had problems with the business so that you know the possible pitfalls and where to focus your attention during the opening months. If you know the primary reasons that people fail to make the franchise run effectively then you can be careful to avoid these problems yourself and have greater success with your business. While the franchisor may be less likely to want to discuss the kinds of problems which people have had with the business, and be more interested in discussing the positive aspects, you should be sure to get the information which you need and not take no for an answer. Be polite, but make sure that you get a sense of which aspects of the work are the most challenging.
Ask the franchisor what aspects of running the business take most people by surprise see what kinds of things potential investors are most likely to overlook when they are starting to run the business. Know what kinds of blind spots there generally are and how you can avoid running into them. Remember that when you are running a franchise you will need to be responsible for every aspect of the business and its success or failure will rest entirely on you if there are things that you might be overlooking then you need to be aware of the risks which are involved and keep everything which could have an effect on the success of the business in mind.
When you talk to the franchisor you should ask them about any other issues which you are unsure about one thing a lot of new franchise owners are concerned about is advertising. You need to realize that on one level the most important form of advertising for many franchise businesses is the simple location where the business is built. In most cases, a large franchise company will either dictate the location of the new business or give you a choice of locations they do this because after the research that they have done on over hundreds of locations around the country, they know the characteristics of what makes a successful franchise location. You should listen to what they have to say about the best place to locate your business.
Similarly, you should listen to the advice of the franchisor when you are thinking about the best way to market your business and you should take their advice in advertising in the local area. Usually you will be able to get some support from the franchisor in marketing your company you have already received some help from the franchisor simply by being able to use their brand when you start up the business. If the franchisor is willing to go in with you on your advertising expenses in the local market then you can bring in more customers and have a better business experience in general. This is a great way to get more customers to your door and most franchisors will be willing to meet you at least halfway as far as advertising expenses go. Talk to the franchisor about these possibilities and see what kind of answer the representative will give you.
Finally, ask your franchisor what they most frequently hear that people say they would do differently if they could go back and start their business again. You should be willing to take advantage of the advice of the franchisor at every phase and be responsible for getting the information that you need. There are so many different aspects to running a business that at times it may seem like you are having to overcome almost insurmountable obstacles, but with the assistance of a company which gives you the best information and your willingness to learn from other peoples experiences you can have a clear advantage over those who do not put in the same kind of effort to find out what the right thing to do is in any given situation.
Good luck getting the information that you need, and remember that whenever you are in doubt and need more information, the franchisor should be there to provide you with at least some of the answers that you seek, and help you find out the rest of what you need to know. There are always questions to be asked and answers that you can find to improve your performance, and as a responsible entrepreneur you will be able to take advantage of a wide variety of sources to get this critical information. Always have the right kind of inquiring mind and ask not only the questions which I have listed above, but also any kind of questions which you can come up with beyond this list know everything that you can in advance of running your business and you will be able to have a better and more successful new franchise, no matter what market you are in!