Five Must Ask Questions Before Investing in a Franchise

There are so many opportunities in franchising that it’s tough to know which ones are worth further investigating and which ones may not be a good fit for your personal and financial goals.  Before you sign anything with a franchisor, here are five questions you must ask (and answer) yourself.

When potential candidates begin talking with franchise systems, they tend to ask pretty standard questions: How much money can I make? How much will I have to spend? How big can I get? Is the franchise territory exclusive? But the deeper you go in your research, the more pointed and detailed the questions get, and they’re critical for a franchisee candidate to ask before signing the franchise agreement.

What does your first-year support look like?

Most good franchise systems, understanding how important the first year of franchise ownership is and how likely a new owner is to struggle, provide extra support and coaching. It could mean the home office assuming all responsibility for marketing, or using customer service reps in a call center to schedule jobs while the franchise owner concentrates on executing the baseline work.

There are all kinds of ways of offering support. But it’s important for any franchisee to know what kind of help they’ll be getting at a time when they’ll really need it.

What are the most common problem areas for franchise owners in your system, and how do you help solve them?

The test of a good franchise system isn’t how well it works when business is going strong. It’s how it helps its franchise owners when they struggle. Even the smartest and hardest-working business owners in rock-solid systems run into challenges every now and then.

When that happens, the franchisor’s operations staff should be prepared to help the owner respond to the problem effectively. In the best systems, they’ve seen and can anticipate many of the pitfalls the business may face.

What kind of insurance should I have?

Don’t overlook this. Some businesses even require certain types of insurance (this would be addressed in the franchisor’s Franchise Disclosure Document).  It’s important to be protected in case of accident or natural disaster, and you need to make sure you’re including the ongoing expense in your business plan.

What kind of ongoing training is available?

Smart franchise systems understand that their franchisees need to keep their skills honed, and franchisees in the system need to stay up-to-date on best practices. Ongoing training opportunities are great for a secondary reason: they send the message that the franchisor cares enough about its franchise owners to give them the tools to succeed.

What’s the relationship among franchisees like?

A culture of cooperation among franchise owners can make the difference between success and failure, and good franchise systems go out of their way to foster good will. Incentives help: franchisors can single out especially helpful veteran franchise owners in internal communications, or they can give monthly “helping hand” awards for the franchisee who most helped first-year owners.

Going into business for yourself requires careful consideration and due diligence – and it’s not a decision to be taken lightly.  But it can be the most rewarding things you can do for your career.  FranchiseWorks.com features some of the best franchises in their respective industry and is a great introduction to those brands.