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5 Questions to Ask Before You Buy a Franchise Business

By: Jania Bailey



Some good questions candidates should ask before they buy a franchise business

When entrepreneurs begin talking with franchise systems, they tend to ask pretty standard questions: How much money can I make? How much will I have to spend? How big can I get? Is the franchise territory exclusive? They’re sort of the first-floor questions, if you will.
But the higher you go in the building, the more pointed and detailed the questions get, and they’re critical for a franchisee candidate to ask before signing the franchise agreement. Here are five:
What does your first-year support look like?
Most good franchise systems, understanding how important the first year of franchise ownership is and how likely a new owner is to struggle, provide extra support and coaching. It could mean the home office assuming all responsibility for marketing, or using customer service reps in a call center to schedule jobs while the franchise owner concentrates on executing the baseline work.
There are all kinds of ways of offering support. But it’s important for any franchisee to know what kind of help he’ll be getting at a time when he’ll be needing it most.
What are the most common problem areas for franchise owners in your system, and how do you help solve them?
The test of a good franchise system isn’t how well it works with top performers. That’s easy. It’s how it helps franchise owners when they struggle. Even the smartest and hardest-working business owners in rock-solid systems run into challenges every now and then.
When that happens, the franchisor’s operations staff should be prepared to help the owner respond to the problem effectively. Experienced operations staffers have seen almost everything.
What kind of insurance should I have?
Don’t overlook this. It’s important to be protected in case of accident or natural disaster (this is especially true in food franchise systems), and you need to include the expense in your budget.
What kinds of ongoing training are available?
Smart franchise systems understand that their franchisees need to keep their skills honed, and franchisees in the system need to stay abreast of best practices—which, depending on the field, can change in days or weeks! Ongoing training opportunities are great for a secondary reason: They send the message that the franchisor cares enough about its franchise owners to give them the tools to succeed.
What’s the relationship among franchisees like?
A culture of cooperation among franchise owners can make the difference between success and failure, and good franchise systems go out of their way to foster good will. Incentives help: Franchisors can single out especially helpful veteran franchise owners in internal communications, or they can give monthly “helping hand” awards for the franchisee who most helped first-year owners.
Systems like these automatically pay themselves forward; as franchisees mature, they find they want to reach out to new franchise owners to help them the way they were helped when they started. That kind of culture can make a huge difference for the entire system.
FranNet is here to help as well. As a network of franchise consultants, we match entrepreneurs to some of the industry’s top franchisors through a careful evaluation process, developed over 25 years and based on candidates’ preferences, goals, budgets, passions and interests.
Want to know more? Download our free “Roadmap To Success” guide, then check our roster of consultants to find the one nearest you!
This article was originally published by FranNet.com.
Published: May 29, 2013

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Jania Bailey

Jania Bailey is president/COO of FranNet, North America’s most well-respected franchise consulting firm. Bailey sits on the board of directors for the International Franchise Association (IFA) and is a certified franchise expert. Her background includes over 25 years experience in the banking and franchise industries.  Bailey also authored the book, “Thriving – The Journey to Success in the Business World.” 

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