For aspiring franchise owners, the research phase is one of the most important aspects of buying a business. During this time, it is crucial for individuals to evaluate their personal goals and concerns, and then gain further insight by preparing a list of critical questions to ask potential franchisors.
Over the years, I have met with potential franchise owners from all walks of life and been asked many questions regarding franchise ownership. Here are 6 key questions every individual should ask a franchisor when researching a franchise opportunity:
- How will the franchise system support me? The level of support that the franchise system provides its owners can make or break your business. It is important to know what the franchisor will do for you not just on day one, but after you are open for business.
- How do franchise owners make their money? Any businessperson should ask the franchisor about their revenue streams and how/why the business is worth the investment.
- What additional expenses are there on top of royalties? The franchisor should offer a clear picture of any additional expenses there might be for franchise owners on top of traditional royalties. Some franchises will charge advertising fees in additional to royalty payments, and if they do you should know exactly what you are getting in return.
- How is my location determined? Any solid franchisor should make sure your franchise location is viable for your business. It is important to know how the location is determined and whether or not the franchisor helps you with this or even conducts research on your behalf.
- How has technology changed your business model? A successful franchise evolves with the times and continues to innovate on behalf of its owners. This is a key question to ask that can offer a clear indication that the franchisor knows how to adapt and thrive.
- Is there an exit or retirement strategy for franchise owners? Potential franchise owners tend to overlook this last key question, though it is a big one. A franchisor should be just as willing to help you when you are ready to retire or leave the business as they are when you are first getting started. Make sure to ask your franchisor about how they can support you in this way once you are ready to sell the business.
Ultimately, taking the time to ask the right questions will pay off as you prepare to invest in a franchise opportunity. The strongest franchises are fully vested in your success and will be more than willing to answer all of your questions during the research phase while appeasing any of your concerns. It is in my experience that these open lines of communication can lead to a strong relationship between the franchise owner and the franchisor that is built to last.
Doug Harlan is regional vice president for Minuteman Press International for the Chicago region providing ongoing support to Minuteman Press franchise locations in his area. For Minuteman Press franchise opportunities, visit www.minutemanpressfranchise.com.