Question time: How to get the info you need
Written on the 23 April 2013
Researching a potential franchise investment means asking a lot of questions, and often the best source of information is the franchisor themselves. Here are some smart and sensible questions every prospective franchisee should ask.
How many years has the franchise been in operation?
It may be a simple question, but the answer will give you some clues as to the track record and sustainability of the business. Maybe the franchise is in its infancy, or perhaps the business has years of experience behind it. What youre looking for is a brand that has experienced strong and steady growth relative to its years in the market. Ask questions about their future growth strategy to see if it matches your own expectations.
How many franchises are there in total?
Weighing up the franchise numbers, locations and time in market can provide a clearer picture of the companys history and whether its a well-tested franchising system. For example, if there are just a handful of stores, its possible the business model is still evolving. On the other hand, a considerable number of established franchises evenly dispersed across the market could indicate steady growth and a nationally recognised brand. These kinds of practical details can help you make some business assumptions.
How much initial investment will be required?
Ask the franchisor about the initial franchise fee, as well as any other overheads and pre-opening fees. Use these figures to calculate the total cost of setting up your franchise before it opens for business.
Is the business model a profitable one?
Feel free to ask the franchisor what sort of profits you can realistically expect to have in your first year. An established franchise will be able to provide some average figures and timeframes to help you estimate when your business will be turning a profit.
Will franchisees receive training?
Find out what the franchisor will be providing you in terms of training. Many franchises provide extensive training programs that teach you the fundamentals of running a business.
What support systems are in place for franchisees?
The beauty of franchising is youll be part of a larger team, with ongoing backup to guide you through the inevitable challenges of running a business. Enquire about the franchisors ongoing support program, including day-to-day operational advice, financial support and legal resources.
Is marketing support included?A good franchising system will be able to offer you initial and ongoing marketing support to help you promote your business. Ask about their national marketing strategies and what kind of support you can call on for your own local marketing campaigns.
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