Franchisees tell you the truth. You’ll receive a list of all the existing franchisees in the Franchise Disclosure Document you get from the company, so take the time to call at least five to ten of them. Call these franchisees and ask them the tough and detailed questions listed in the “Questions to Ask Existing Franchisees When Buying a Franchise” chart stated below.
Existing franchisees are typically very open and honest in relating to you how they bought their franchise business. They will tell you what they like and dislike about the franchisor and the franchise program. Franchise prospects have told stories about existing franchisees inviting them to come into their stores to review the store’s profit and loss records. The existing franchisees remember how they wanted help when they bought their franchise, and now they want to help you.
Here is the list of Questions to Ask Existing Franchisees when Buying a Franchise:
1. Has owning a franchise been good for you?
2. Were you trained properly for running the business?
3. What does the franchisor do well for you?
4. What do you think of the franchisor’s marketing and advertising programs?
5. What is the biggest advantage of your business?
6. What is the greatest weakness of the business?
7. Why might one fail in this business?
8. How long did it take before you started making a profit? Are you making the money you expected? How much money do you make with the franchise?
9. What did it cost you to build and start the franchise?
10. Did you finance the cost of the business? How easy was that?
11. How many hours a week do you work on the franchise?
12. What is the reputation of the franchisor in the industry?
13. Is the business different from what you originally expected?
14. Does the management have the expertise and experience to teach you how to operate the business?
15. Are you satisfied with what the franchisor is doing?
16. If you had to do it all over again, would you select the same business and the same franchisor?
17. Are there restrictions regarding suppliers from whom you can buy goods and services? Has that been a problem? Are costs okay?
18. How thorough a job did the franchisor do with the site selection and lease negotiation process? And with the whole pre-opening process?
19. How did you obtain sales and profit information to help you with your initial plans?
20. Does the franchisor seem financially healthy?
21. Is there any turmoil in the franchise system?
22. Are there any new products or developments coming out?
Through calling and asking questions to other franchisees, this can help determine if your interest in the brand is surprisingly increasing or you just feel that this is not the brand for you. No matter what happens, you must trust your gut or your instincts. Remember, in owning a franchise, you should do what you are passionate about so that you do not have to feel that you are working every single day.
This article was written by Michael R. Liss, a business and franchise attorney working to help businesses start and succeed. He is a frequent instructor at area colleges on buying a business, franchising, financing, and the legal issues which business owners must know. He can be reached toll-free at 888/372-6529.