You’ve taken the first step to becoming a franchisee by completing the online form. The time has come for the interview process with the franchisor, where you can explore the potential for a long-term relationship.
As with most job interviews, both sides are trying to decide if they would be a good fit for one another, and you want to leave with a feeling of clarity. To do this, you’ll need to engage in a conversational interview, one that allows both sides to ask questions and get to know each other better. We’ve put together a guide of questions that all parties involved need to ask when buying a franchise.
What Questions Should You Ask the Franchisor?
During your initial franchise interview, remember that the interview process will go both ways. Below are five essentials questions that you should ask the franchisor to understand the business better.
1. What is the History of the Franchise?
Before getting involved in any franchise, you’ll want to make sure that your beliefs and values align. The best way to do this is to ask about the franchise’s history when meeting with the franchisor. Let them tell you about the motivation behind the business, who was part of the founding process, and what kind of experience they had.
By getting a brief overview of the company, you’ll understand what kind of people you’ll be working for and with. It allows you to determine if you’ll be a good fit for the company or identify potential problems that may arise down the line.
2. How Much Can I Make as a Franchise Owner?
This question is one of the most common ones asked by franchisees, and with good reason. No self-respecting business owner would want to buy into a franchise that has no earning potential. Most businesses won’t make money in their first year, and income depends on location and economy.
Although franchisors aren’t able to give you a specific number, asking this question gives you an idea of what you stand to earn. Ask the franchisor to see their Franchise Disclosure Document or FDD to get an overall picture of the franchise’s finances. Items 19 and 21 are beneficial in this regard. Additionally, you should inquire about what plans the franchisor has for growth and how this will affect you as a franchisee.
3. How Much is the Initial Franchise Fee?
Initial franchise fees can range anywhere from a few thousand dollars to well over a million dollars. The FDD discloses detailed information about the initial franchise investment under Item 5.
Item 6 discusses all other fees the franchisee must pay to the franchisor throughout the franchise agreement. Item 7 outlines additional start-up costs such as build-out costs and licensing. Discussing these fees with the franchisor protects you from being blindsided later on with surprise fees.
4. What Kind of Training and Support Is Given to Franchisees?
Many franchisors offer new franchisees initial training to help them get their new franchise up and running. This support can come in many different forms. For instance, field representatives or traveling trainers may be assigned to your franchise for the first few weeks to train new personnel and show them the ropes.
Opening day is crucial for any business, and it sets the tone for the weeks to come. Other support offered to franchise owners will likely include advertising and marketing help to get the word out in their local area. They may provide opening-day perks for first-time customers and send corporate personnel to oversee the openings and let you know about any areas that need help.
5. Can I Speak to Existing Franchisees About Their Experience?
Speaking to existing franchisees about their experience is often more telling than communicating with the original franchisor. Franchisors are legally required to disclose information about previous and existing franchisees, so you have every right to request this information.
Asking them about their challenges during the start-up phase will help you get an idea of how yours will go and what you can expect. Current franchisee’s unbiased answers about their dealings with the franchisor can help you decide whether you will be a good fit for the franchise system. They’re also in the best position to tell you about any ongoing support they currently receive from the franchisor.
What Questions Might the Franchisor Ask Me?
Franchisors need to be picky about who they let into their company. After all, once you become a franchisee, you’ll be representing them and their brand. Here are a few questions franchisors will ask prospective franchisees.
6. How Do You Plan to Finance Your Franchise Business?
Buying into a franchise business is a serious investment, and even the most successful franchisees take a few years to break even. During this time, you’ll need to prove that you can survive financially to keep your business and your family afloat. Franchisors often ask about your net worth and financial stability to make sure that you can ride the waves of financial uncertainty until you start to make a profit from your franchise business.
7. What Long Term Goals Do You Have as a Franchisee?
Franchisors are looking for franchisees who plan to be in the business for the long haul. They’ll want to know where you see yourself in 5, 10, or even 20 years. If you have children, do you plan to pass the franchise down to them? Will you sell your business once you plan to retire? Franchisors are curious about the exit strategies of their franchisees, so it will be helpful to have a clear outline in mind when answering this question.
8. What Actions Will You Take as a Franchise Owner to Build a Strong Customer Base?
A franchise is nothing without a solid customer base. A successful franchise needs to draw in and retain customers, which won’t happen without a solid business plan.
Franchisors ask this question to see if you’re willing to commit to years of marketing and continuous efforts to attract customers to the franchise. Will you visit local companies, neighborhoods, and businesses to get involved in the community? Or will you plan to deliver personalized service that keeps people coming back?
9. What Does a Successful Franchise Look Like to You?
While you may have the money it takes to start a franchise, the wrong attitude or idea of a successful franchise could have the franchisor showing you the door. Remember, franchisors want people committed to representing the brand and sharing the same qualities and values.
On the other hand, simply loving the brand and looking to own it won’t guarantee success for the franchise either. They’ll want to know your reasons for choosing the brand, how you plan to make it successful, and what success means to you.
10. What Experience Do You Have as a Business Owner?
As mentioned in the above question, all the money in the world won’t keep your franchise afloat if you lack the experience and skills needed to manage it properly. Knowing how to run a business and interact with employees is vital to being a successful franchisee.
Franchisors want to know about your business background and if you’ve owned a franchise in the past. If so, was it a success? What made it successful? Determining your experience with business management will help both franchisor and franchisee decide if a more experienced partner or manager is needed.
Is Franchise Ownership Right For Me?
Franchise ownership is no small matter. While you may initially focus on the franchise brand, it’s beneficial to examine yourself and see if you’re ready to be a business owner. When deciding whether or not to take on a franchise opportunity, it’s helpful to consider the following questions:
11. Will I Have the Support I Need During the Start-up Phase?
The startup phase of your franchise will take up a lot of your time, and if you have a family, you’ll need to have their full support. Agreeing to become a franchisee without their consent could lead to the failure of your new business.
12. Do I Have the Qualifications to Take on the Role of a Franchisee?
How many years of experience do you have in running a successful business? Have you ever created a successful business model? There’s nothing wrong with learning on the job, but having a background in business management will help during the early phases of the franchise.
13. How Passionate Am I About the Franchise System?
Entering into a franchise organization is a long-term commitment. If you’re not passionate about the franchise system, it could fail to hold your attention long term. You’re going to need to put in many hours for the first few years, and losing your passion could result in you losing your franchise business.
14. How Much Time Am I Willing to Dedicate to a New Franchise?
What stage of life are you in currently? Will you have the time needed to run a successful franchise? You might have the money, but it may not be the right time to consider becoming a franchisee if you fill your time with other responsibilities.
Becoming a franchisee is like starting a long-awaited journey. You’re a bit excited but also nervous to see what’s on the other side. However, performing your due diligence is one way to take the edge off and get your franchise ownership off to the right start! While the brand name is important, your responsibility is to make your franchise business a successful one.