Exploring Franchise Opportunities: Get the Answers YOU Need!
Company Added
Company Removed
Apply to Request List

Exploring Franchise Opportunities: Get the Answers YOU Need!

Transitioning corporate executives and other individuals that may be exploring franchising as a career alternative often ask me to help them outline questions to ask franchisees and franchisors as they're doing their due diligence. Here's how I advise them...

Using the Franchise Disclosure Document (FDD) as my guide, I would ask very specific questions. I would follow the FDD item by item and ask questions pertaining to each section. It's a can't-miss road map.

Exploring a franchise opportunity outside the United States? As most franchisors are either based in the United States, or, at the very least, offer franchises within the United States, they will already have developed a Franchise Disclosure Document to provide to franchise candidates before the franchisor can accept any money from the franchise candidate. As they are required to do so, I would request a copy of the FDD about any franchise concept you may be exploring. You may do so directly from the franchisor or from the various federal and state agencies within the United States of which most can be accessed online.

Get to understand the history of the concept, the passion of the founder, and the experience of the executive and support teams. Have they actually worked in a location? Have they owned a business before? Kind of hard to provide guidance if they haven't!

Make them validate the expenses involved and gain a complete understanding of the range of expenses and why? Ask questions about assistance from finding a location through to grand opening. Ask about the temperament of the franchise group as a whole and within your market. Of course, I highly recommend speaking with franchisees too. Make sure to ask them point blank questions about costs, problems, profits, trends, etc. Ask the franchisor and franchisees about the competition. Ask about business, revenue trends of the system as a whole.

Ask questions about the operations manual. Ask questions about advertising cooperatives and associated fees. Focus on year two and three that are usually turning points in your business and relationship with franchisor. Ask questions about normal, routine support and support if you are in trouble, crisis!

Ask about exit strategies, either because you may want to exit or because you must exit. Ask about transfer fees and the process in selling your business. Understand the franchisor's approval process.

Ask questions about franchisor's litigation. Know the why's and how's. Ask why each franchisee listed as failed, actually failed?

More than anything, after this process is complete, trust your gut instinct! Take your time and think this completely through until you're 100% sure of your decision. Make sure you have all your support mechanisms in place including friends and family. Do not kid yourself. Do not lie to yourself. And, do not justify any negatives.

Published: May 13th, 2011

Share this Feature

Shakeaway
SPONSORED CONTENT
Shakeaway
SPONSORED CONTENT
Shakeaway
SPONSORED CONTENT

Recommended Reading:

Comments:

comments powered by Disqus
Perspire Sauna Studio
SPONSORED CONTENT

FRANCHISE TOPICS

Amazing Lash Studio
SPONSORED CONTENT
Conferences
Caesar's Forum, Las Vegas
APR 6-9TH, 2021

Featured Opportunities

Precision Tune Auto Care
Precision Tune Auto Care has been in the automotive aftermarket business for more than 40 years. We know the industry and we make it easy for you to...
Home Care for the 21st Century
The World's Only Home Health Franchise Opportunity with 8 Turn-Key Business Models under one umbrella. Plus over 50 Professional Staff to Support Our...
Twin Peaks
Twin Peaks is so much more than your typical sports bar. This lodge welcomes every guest with World Series walk offs and barrel-aged whiskey.
Veronica's Insurance
Veronica's Franchise is the best choice for opening an Insurance Broker Location. Veronica's has more than 25 years of experience. Be part of our...
SONIC Drive-In
Here's your chance to own a SONIC® Drive-in Franchise Restaurant. As the nation's largest drive-in chain, SONIC® has successfully served up hot,...

Subscribe to Our Newsletters