Hungry Ex-Forces Franchisee Reaps The Rewards of Hard...
So, you’ve spent countless hours scouring the internet, magazines, and even been to an exhibition to find the perfect franchise opportunity. Now it’s time to meet with the Franchisor. But what are the questions you need to be asking? Here at The Franchise Show we have devised a list of key questions and topics you should be asking the Franchisor, either when you meet them at a discovery day or when visiting their stand at The Franchise Show.
What is the total cost of the franchise?
It is very important you know exactly how much it will cost you to get up and running as a franchisee. This does not just include the Franchise Fee; different brands will include different aspects in the set up costs. You will need to include set up costs to get you up and trading, as well any investment in the short term whilst your franchise becomes established.
How long has the business been operating/Franchising?
One of the key benefits of buying into a Franchise is that you are buying into a proven business model. You need to be certain that the Franchisor has been operating long enough to prove the business model is viable.
How many franchisees do they have and how many fail to achieve the franchisee projections?
The more franchisees within the network the greater the likelihood that you will be a successful franchisee. It is important to ask what percentage of franchisees achieve the franchisee projections, and also what percentage do not achieve these. This will give you a better understanding of the network as a whole.
Does the sector the franchise operates in have a long
Buying a Franchise will hopefully be a long term business for you. It is therefore important that the industry you choose has longevity. Ask the Franchisor what statistics and facts they have to prove this.
Is the business seasonal?
Some Franchise businesses are seasonal, so it is a good idea to see how much variance there is between the different months. There will be some months where the business will be very profitable, however there may be months where the profits may be tighter. You will need to be sure you can survive the leaner months. Check to see how the current Franchisees manage through these months.
What support is provided to franchisees?
One of the key benefits of buying into a franchise network is the support from both the current franchisees and the Franchisor. Most franchise brands do not require previous experience as they provide full training. It is a good idea to make sure what support you do receive to make sure all aspects are covered.
What is the role of a franchisee?
It is key to understand exactly what your role will be as a franchisee. Are you working from home, working in a shop, van based etc? For example, there is no point buying a sales based franchise if you are not very good at sales! It is a good idea to find out what a typical day in the life will be like to make sure the opportunity really suits you, your family, and your lifestyle. Many Franchises will have discovery days where you can get a better feel for the daily life of a franchisee.
What skills and competencies does a franchisee need?
Even though many Franchises don’t require previous industry experience (please note there are some that do, so it is advised to check!) there will be a certain level of skills and competencies that you will need to have from the beginning. These may be very simple, such as IT skills, or previous retail or management experience. It is good to check with the Franchisor about these beforehand.
Has the business been set up correctly and according to industry standards?
Unlike other countries, here in the UK there is no law set out that a franchisor must seek professional advice before setting up the franchise. There is also no law that states the terms of the franchise agreement has to be fair. It is advisable to check with the Franchisor who they used to set up their franchise and to produce a franchise agreement. There are a few self-regulatory bodies in the UK, such as the BFA and AFA, if the franchisor used consultants or lawyers accredited by these then you have a degree of comfort that the Franchise was set up correctly. You can always seek professional advice if you are unsure.
Can you speak to existing franchisees?
It is key to remember that many Franchisors main aim is to recruit new franchisee, sometimes they don’t tell prospective franchisees everything an individual need to know. To get an independent and full assessment of a franchise, it is a fantastic idea to ask existing franchisees, what their personal experience is like both the good and the bad. If the franchisor will not allow you access to the franchisees, you should be wary and ask yourself if they have something to hide. It is important to remember that not every franchisee will have a 100% positive review of the franchise, sometimes this is not down to the franchisor but down to the franchisee themselves. You will need to use common sense when assessing what they say. However, if you have any concerns it is a good idea to ask the franchisor to comment.