Before you sign up to a franchise you’ll want complete confidence in the business model and the franchisor.
As part of the process of so-called due diligence (quite simply this is just thorough research of the business) franchisors will supply essential information about the business to the franchise buyer.
Even if everything looks right, it’s really worthwhile taking the time to source independent facts and figures, and to get feedback on what the franchisor has told you.
One way to get answers to some crucial questions about the business model is to ask franchisees themselves.
Franchisors will provide a list of past and present franchisees for you to contact and it is highly recommended that you make the effort to speak to as many as you can.
Talking to these franchisees on the phone is the very least you should do - visiting franchisees gives you even better insights.
Consistency is important (across the network and across brands) because it allows you to make comparisons. So put together a set of questions that cover all the burning queries that you have and apply them to every franchisee you contact.
Here are seven must-ask questions to get you started:
What did the franchisor do practically to ease the start-up stage? How could they have improved that process?
Did you start your business well-trained? Have you been able to take up opportunities for continual learning? Have further training sessions proved valuable?
What does the franchisor do to help you run and improve your business? Have they fulfilled their support commitments?
Does the marketing campaign have an impact on your business? Is it easy to work with and effective at engaging customers? Is it cost effective?
Is there strong communication between you and the franchisor? Do you trust the franchisor’s decisions? Have you clashed with the franchisor - if so, what was the process for solving this and what was the outcome?
Does the franchisor’s buying power result in savings for you? Do you think the franchise fees are well priced? Have there been extra costs you weren’t expecting?
Purchasing multiple outlets or units of a franchise is another sign of confidence.
If you have queries following this research, take your concerns back to the franchisor to get their side of the story.