10 questions to ask if you’re interested in a franchise opportunity

While you might have decided that investing in a franchise opportunity is definitely something that interests you, there’s a lot of choice out there and that can make it difficult to identify which one would be the best fit for you. You’ll need to thoroughly research any opportunity you’re interested in. So here are some questions you can ask franchisors that will help you learn more about what they’re offering.

 1.“How resilient is your franchise opportunity?”
It’s important to get an idea of how resilient the franchise’s market is likely to be. Would it be particularly susceptible todownturns, or can you expect the demand for its services or products to remain fairly consistent? Even when economic times are less turbulent, you still need to be aware of the level of competition in the market too. How does the franchise business set itself apart from competitors?

Ask about how many units it has currently and whether the available territories are exclusive as well. While most franchise business owners are unlikely to avoid competing with other businesses, it’s not ideal if they could also end up competing with other franchisees from the same franchise.

 

2.“Has your franchise opportunity been externally scrutinised?”
Unfortunately, as you’ll be well aware, there are all kinds of scams out there these days and the franchise sector is sometimes targeted. And even if the franchise is genuine, some can be lower quality so you could end up paying a franchise fee then discovering it has far less potential than you had been led to believe. One reassuring sign of a franchise that takes quality standards seriously is if it is affiliated with the British Franchise Association. Membership of the BFA means that any given franchise will have had its opportunity rigorously checked to make sure it’s a sound business proposition that genuinely lives up to expectations.

 3.“What’s the earning potential of the franchise opportunity?”
A franchisor won’t be able to give a precise figure in terms of what you can expect to earn; it depends on many variables, including the level of effort you are prepared to put in. But a franchisor should be able to provide you with rough financial projections. Ask about the point at which franchisees typically break even, and how much capital you are likely to need to see you through the initial period while the business is building up. Also check the extent to which the franchisor will provide business planning support as this process will enable you to get a more detailed idea of the turnover, ongoing costs and income potential in relation to your own particular circumstances.

 4.“What’s included in the franchise fee?”
Obviously it’s really important that you have a clear understanding of exactly what fees you will need to pay, when you will need to pay them and how often, and what you can expect in return for those fees. You should ask your franchisor for an itemised breakdown of what you’ll receive in return for your franchise fee to make sure there are no unpleasant surprises a few months down the line. Check about the level of ongoing operational support you’ll be given as part of the fee too.

 5.“Does the business have any industry accreditations?”
This won’t apply to every franchise but in many cases it’s important to examine the quality standards not only of the franchise opportunity itself, but also of the parent business. That will help give you an idea of the type of quality standards it works to and will expect its franchisees to uphold too. At Jackson Fire and Security we are holders of several major industry accreditations, including NSI Fire and NSI Security Gold – there’s more here about why we think achieving quality standard accreditations is so important.

 6.“How long has the business been running for?”
It’s useful to get a sense of how the long the franchise itself has existed. A franchise that has been up and running for a while will have had the opportunity to shape the operating framework and fine tune it into a proven business model. Obviously a more recently franchised business won’t be able to point to such a long-term track record but that doesn’t mean you shouldn’t consider it. Take a look at the business behind the franchise and its longevity – if it has consistently performed well, that’s a very positive sign that the franchise business opportunity is worth considering. There may well be more territories available from newer franchisors and fees could be priced more competitively too.

 7.“What training and development will be offered?”
It would be unusual to have a franchise where there isn’t at least some training provided in the early days; you will need to be guided on all aspects of getting the franchise up and running in accordance with the operating model that it is based on. For some franchises that might be the extent of the support provided on this front, but others will provide training beyond that point. Some franchisors might even extend that to the employees you take on, at least in the early days, so make sure you know what will be on offer.

 8.“What would you say makes a good franchisee?”
No franchisor will want to be too prescriptive about this as quite often franchisees can come from really varied backgrounds and go on to run highly successful franchise businesses. Some franchises will have more specific requirements in terms of the skills and experiences that are needed. But quite often it can be much more flexible – for example, management franchises are more concerned with the transferable skills that someone brings rather than industry-relevant previous experience. So it’s useful to get the franchisor perspective – often what matters most is the attitude and enthusiasm someone has.

 9.“Is it possible to have a chat with your existing franchisees?”
One question we’d highly recommend you ask a prospective franchisor is whether you can speak with its current franchise business owners. They can provide a wealth of information about what it’s like to run the franchise business day to day. You might find some inspiration about questions you can ask them in our article “Eight questions to ask existing franchisees”.

 10.“Where can I learn more?”
As well as talking to other franchisees and looking through prospectuses (you can download ours here) most franchisors will also hold face to face events to help you find out more and ask any questions you have. It’s a great way to get a feel for what the company is like, helped by the fact that it will often involve going along to the franchisor’s premises too. If you are interested in visiting us to learn more about our opportunity then please do book onto one of our discovery days.

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