What Questions Should Prospective Franchisees Ask their Franchisors?

Every prospective franchisee should be asking certain essential questions before makeing their purchase decision.

Here are a set of questions to make the task easier.

Question 1: What are the Criteria for Choosing Your Franchisees?

Most of the franchisors have a list of criteria that they are looking for in prospective franchisees. It is important to know those criteria before you take the next step forward.

Question 2: What makes you Unique from Your Competitors?

By understanding the unique selling points and advantages of the franchise, you can analyze your chances against the competition in your local market. 

Question 3: What will be the Total Investment that the Franchisee will need until it Breaks Even?

From the initial investment until the franchise starts making a profit, funds are needed to run the franchise. Being a franchisee owner, you need to be financially ready for the expense. 

Question 4: What Financial Incentives/Offers/Discounts will you provide?

There are many franchisors who offer discounts for women, minorities, and veterans on the franchise fee or royalties.

Sometimes, there are also rebates for specific franchise locations as well.

Question 5: What Marketing will you do for Your Franchisee?

Some franchisors collect money from their franchise network for marketing.

If so, then ask for details and understand how they are planning to spend the money.

Question 6: What are the Ways you prefer to solve any Disagreements or Disputes?

Like in any other business, disagreements and disputes are possible in the franchise business too. Understanding how your franchisor resolves disagreements will help avoid issues later. 

Question 7: What is the Percentage of Profit that a Franchisee can make?

The franchisor may not be able to provide the exact percentage of profit but, a close approximation will be possible.

Question 8: What will be the Franchisee Territory & How will it be Protected?

Check with your franchisor how they manage the franchisee territory and the rights provided to the franchisee. If the franchisor is supportive and protective of the franchisees, then it impacts the success of the franchise.

Question 9: What will happen if Your Franchisor Fail?

A franchisor can fail! Yes, so make sure what your rights are. For instance, will you be able to continue with the same brand name or not? 

For more insights into the questions franchisees need to ask their franchisors, Contact Us.