Questions To Ask A Franchisor And Their Franchisees

By: Chris Delacey - Founder & CEO RedHotFranchises.com

 

Questions to ask a Franchisor

1. What assistance does the franchisor provide? Do they assist with training, store design, construction and site selection?
2. Do they have access to demographic data to get an understanding of the audience within the market area?
3. What types of support will the franchisor provide once your franchise has opened its doors?
4. After the initial investment, how much working capital will be required?
5. Does the franchisor offer any form of financing?
6. Ask the franchisor how many franchises have been sold in the state you will be operating in during the last 12 months, and how many have been opened for business?
7. What types of territorial restrictions and protections have been set up by the franchisor?
8. Is the franchisor planning on expanding within your state? Are they focusing on any specific locations?
9. What arrangements are established through the franchisor in terms of product supply?
10. Ask to see a current price sheet.
11. Ask if the franchisor has been forced to terminate any of its franchisees and if so, can they detail the reasons for this decision. How many franchisees have failed?
12. Are there any current lawsuits pending or past judgments against the franchisor?
13. What steps are taken to settle disputes between the franchisor and franchisees?

Questions to ask Franchisees

1. How long have you owned your franchise?
2. What was your background prior to buying your franchise?
3. Is your franchise profitable?
4. How long did it take to reach your cash flow breakeven point?
5. Were your opening costs consistent with the original projections in the disclosure document?
6. Are you satisfied with the franchisor's support?
7. Are you satisfied with the product or service?
8. Is the operations manual clear, up-to-date and adequate?
9. Are you satisfied with the marketing and promotional assistance provided by the franchisor?
10. Was the initial training and ongoing support sufficient for you to operate your business?
11. Is the franchisor fair and friendly to work with?
12. Does the franchisor listen and help you with your concerns?
13. Have any franchisees had disputes with the franchisor? What was their nature? Were they resolved fairly?
14. Do you know of any disputes between the franchisor and the government?
15. Do you know of any disputes with competitors?
16. Who are the major competitors?
17. What is the company's biggest competitive advantage? What is the company's biggest competitive disadvantage?