Do you think your prospective franchisor is up to the mark? Can you be confident the franchisor has given you the best information available upfront? Here are 18 questions to consider when you’re talking to potential franchisors.
Franchising magazine recently attended a workshop with Kate Groom and Peter Knight of Smart Franchise, who posed these questions – and more – to franchisors. We thought these points are so good we had to share them.
MONEY MATTERS
Does your franchisor:
- Give you written guidance on how to approach banks?
- Require you to receive accounting and business advice?
- Provide guidance on what business advice to obtain?
- Provide information to help prepare meaningful budgets and cashflow?
- Include historical revenue and expenses on the disclosure document?
FAMILY MATTERS
Does your franchisor:
- Provide guidance on what to discuss with your partner or spouse?
- Explain the financial aspects of starting and operating a business?
- Have documented answers to FAQs?
- Have a process to discuss the questions you raise at home?
FRANCHISEE NETWORK
Does your franchisor:
- Encourage franchisees to have a documented three year plan?
- Provide a structured financial review within six months of opening?
- Assess profitability in the network every year?
- Have at least half of franchisees participate in financial benchmarking?
- Have financial management and self-development review tools?
- Offer regular business acumen training?
STRATEGY
Has your franchisor:
- Reassessed the strategy to adapt to the changing environment?
- Refreshed the website and online strategy in the last two years?
- Visited each new franchisee within the first six months?
It’s the process of asking these questions and reviewing the answers that will give you insights into the workings of the franchise. Whatever the answers, you will have the chance to learn more about your potential franchise system, the management team and the business strategy, and find out if the method of doing business suits you.