What Are The Top Ten Questions To Ask When Buying A Franchise?
I always recommend that individuals looking to buy a franchise ask several questions. The first step to validate a franchise is to speak with existing franchisees of that system before moving forward. Franchisees that are already in the system and operating the business are a prospective franchisee’s best resource to learn about the franchise and to help avoid making a mistake. So what are the top 10 questions to ask when buying a franchise?
Here are my top 10 questions to ask existing franchisees:
- What do they like and dislike about the support and training they received?
- Would they do it all over again if they had that option? If they say “yes” or “no” ask them why.
- Do they think they are getting value for the royalty payments that they are making?
- Did they find that the costs to open the business and operate it initially were in line with the Item 7 (of the FDD) list of expenses?
- What types of problems or issues have you faced with the franchise?
- How many franchisees failed last year?
- What do you like best about working in this business? What do you like least about working in this business?
- Is the franchisor open to new suggestions?
- What support have you received from the franchisor besides the initial training that you were given?
- What do you wish you had asked or known before you bought the franchise?
Armed with these ten questions, I would recommend speaking with as many franchisees that are in the system as you have time to call. All of the franchisees that are in the system as of the date of the Franchise Disclosure Document (FDD) and all franchisees that have left the system in the last year (the franchise agreement has been terminated, cancelled, not renewed, or the franchisee otherwise voluntarily or involuntarily ceased doing business) are listed in the FDD with their contact information (sometimes the contact information for former franchisees is outdated). You do not need the consent of the franchisor to call them and the franchisor does not need to set up the call. Make sure to ask these and other questions when buying a franchise.