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10 Questions to Ask the Franchisor Before Signing on the Dotted Line

By: Bill Bradley


Questions to Ask the Franchisor Before Signing

Buying a franchise is a major investment financially, emotionally and physically. There is a lot that goes into making your new business a success. By defining expectations up front, you can ease the transition into franchise ownership. To do this, you need some answers.

Here are the top 10 questions to ask the franchisor before you buy your next franchise.

#1. Can I interview other franchisees?

You’ll gain a lot of insight into what it’s like to own a franchise by talking to other franchisees. Whenever possible, choose the people you interview instead of having the franchisor choose them for you.

#2. What does the franchise fee include? Are there any capital costs built into it?

Most of the time, you’ll need to invest in your own capital. Understanding what’s included in the initial fee and what you’ll need to buy above and beyond that will help you estimate your costs.

#3. What can I estimate for a gross profit margin?

You’ll also want to find out how much you can estimate to earn. Ask the franchisor this question and then compare the answers to other franchisees you interview to get a more accurate estimate.

#4. Is the franchise seasonal?

The answer to this question might surprise you. For example, some fast food restaurants notice a spike in business around school schedules.

#5. When is the best time to set up shop?

Even if your business isn’t seasonal, there might be a better time to set up shop than others. Your franchisor will know the answer.

#6. Do I have to maintain a minimum fee or purchase of goods?

Always know how much you’ll be required to maintain so you’re not caught off guard after you buy your franchise.

#7. How will you continue to help once my doors are open?

One of the perks to starting a franchise is all the support you get from the franchisor. Most of this support comes up front with a proven business plan but many franchisors will also offer support afterward too. Knowing what to expect will help you plan accordingly.

#8. What type of promotional materials do you provide and do I have to pay for them?

Franchisors will provide you a variety of promotional materials, usually in digital and hard copy format. Ask about the types of materials you have access to so you know what to budget for.

#9. How will I keep in touch with you and other franchisees?

Good communication is vital. Know up front how you will be able to engage with your franchisor and others in your business.

#10. How much support do you offer for bookkeeping/operations/other?

As a franchisee, you’ll wear many hats. Understanding what support you’ll get from your franchisor will help you know whether a franchise is right for you.

Are You Ready?

Starting a franchise is exciting. Armed with the answers you need, you’ll be able to choose the right one to match your interest and budget.

Published: July 12, 2016

Source: America's Best Franchises

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Bill Bradley

Bill Bradley

Bill Bradley is founding member and CEO of America’s Best Franchises, LLC.  Bill founded three financial services firms, Ocean Shores Ventures, Denali International and William Bradley Enterprises. In addition, to launching America’s Best Franchises in 2005, Bill orchestrated approximately 20 private equity transactions in excess of $31 million, and launched five specific purpose private equity partnerships.

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