Roughly one in every ten businesses in America comes from a franchisor-franchisee relationship, according to the U.S. Census Bureau. Franchising can speed up the process of establishing a business. It gives franchisees a lot of support and provides clear answers to hard questions.
On the other hand, franchisees should enter the relationship with care, especially when interviewing franchisors. A franchise can become an albatross around your neck if you don’t make sure to look before leaping.
We’ve provided five key questions to ask a franchisor before getting started.
What Do You Look for in a Franchisee?
This one feels like it might be self-explanatory, but it gives you an opportunity to see the values of the franchisor in action. Do their expectations mesh with your managerial style? Do you think you’d work well with their executives?
Think of this as a basic smell test question. Don’t let up if the franchisor gives you something that feels like a non-answer, either. You need to know, as the person owning and operating the business, what the franchisor expects.
What’s My Real Starting Investment?
You’ll know the franchise fee going in, or find out fast. This question should be more about your total investment, though. Things like real estate costs, expected costs of equipment and licenses, should also come in here.
You might expand this question out to other money-related questions as well. Talk about the reasonable time before you’d expect to turn a profit, and ongoing franchise fees.
What’s Your Dispute Resolution Process?
Dispute-related questions to ask a franchisor before buying a franchise deal with the finer points of conflict resolution. If a franchisee feels the franchisor hasn’t lived up to its end of the bargain, how does the franchisor make it right? How does it approach franchisees who don’t fit the mold?
As part of franchising, you can expect information on prior franchise-related litigation. Get a good sense of how often the franchisor has to take these disputes to court. This information can contextualize answers to other franchisor interview questions.
How Do I Reach Out to Other Franchisees?
Franchisors must tell you about their other franchisees. This applies to the smallest senior care franchisee and its franchisor as much as it does the largest fast-food company.
This question should be approached as another smell test. If the franchisor tries to stop you from reaching out to other franchisees or says it’s not necessary, pump the brakes.
Why Are You Any Different From Your Competitors?
If you know you want to start a business in a given field but not which franchisor to partner with, this question will give you a lot of information quickly. You might even learn the answers to the other questions above from this one.
A question like this can often encourage the franchisor to be more forthcoming on some of the same topics as mentioned before. Positioning franchisors against their competitors can create a clearer sense of what they value.
Choose the Right Partner With These Questions to Ask a Franchisor
A franchise, like any relationship, comes with expectations on both sides. Knowing the right questions to ask a franchisor should be like a first date, and tell you if the relationship has the chance of being healthy and fulfilling.