Questions to ask the franchisor:
- Where will they be located?
- What is the success rate of existing franchises?
- What method is used to protect franchisees from poorly performing franchises?
- Is there a franchise owners association?
- Is there a franchise advisory council?
- Who owns the trademarks, service marks, etc., and are they federally registered?
- Are there any disputes pending or threatened against the trademark.
- Has the franchisor complied with the FTC and state disclosure laws?
- Are any senior management or key personnel leaving the system?
- Does this company compete with the franchisees in the marketplace?
- Will the franchisor finance any of the costs?
- Is the franchisor willing to negotiate the terms of the franchise.
What is the total investment required to own a franchise?
- franchise fee
- furniture, fixtures, and equipment
- leasehold improvements
- lease deposits
- other deposits
- franchise training
- travel expense
- advertising and brochures
- grand-opening advertising
- pre opening staff costs
- working capital until breakeven
- working capital - living expenses
What are the continued financial costs, the basis used for calculation, method of payment and frequency of payment?
Must the franchisee purchase products or services from the franchisor?
- Does the franchisor earn income on purchases?
- How much does the franchisor earn?
- How are the products distributed?
- How long does it take for the orders to be filled?
- What other initial or continuing services does the franchisor provide? What do these costs?
Questions about Consumer Research and Marketing:
- What type of consumer research has the company conducted.
- What were the results?
- Has the franchisor conducted any market studies on the territory to ensure that it can support a franchise?
- What are the demographics required to support a franchise?
- What are the traffic counts required to support a franchise?
Questions about Training:
- What are the location, duration and additional costs of initial training?
- Who must attend the training?
- What is the cost of additional staff attending training?
- What is the training curriculum?
- Who conducts the training and what are their backgrounds?
- Who pays for transportation, room and living expenses?
- Does the franchisor provide training materials for training new staff in addition to the operations manuals?
- Does the franchisor provide hands-on assistance during the pre-opening, grand opening and initial period? Of what type, duration and cost?
Questions about Products and Services:
- Are there any new products or services under consideration for addition to the franchise?
- When are they going to be introduced
- what is the estimated additional cost for adding the new products or services?
- Are there any restrictions on the distribution or sale of the product?
- Is there a guarantee or warranty program?
- How is it administered and what is the cost?
- Is there a minimum that must be purchased?
Questions about Operations:
- What are the roles and responsibilities of the field staff?
- How many locations does each franchise consultant work?
- What is the background of the franchise consultant I will be working with? Can I meet that person before purchasing the franchise?
- How often does the field staff visit a franchisee's location?
- What is the additional cost of field services if the franchisee requires it?
- Exactly what kind of assistance is given?
- What kind of supervision or quality control is there?
- What, if any, is the charge for assistance?
- What kind of business management systems are provided to boost sales and profits?
Questions about advertising and marketing:
- What type of consumer advertising does the company recommend?
- What types of cooperative advertising programs are being used?
- What percentage of sales is recommended or required for advertising or marketing?
- How do the franchisees obtain their sales leads or customers?
- What is the franchisor's national/regional advertising program and budget?
- What portion of the national/regional advertising contribution is used for administrative/corporate/agency expenses and fees?
- What are the primary advertising/marketing vehicles?
- What is the grand opening advertising program and cost?