38 Top Questions to ask Franchisors

Buying a Franchise is a huge step, just like buying any business.

The best part about a franchise, though, is that you should expect a great track record and the answers to any and all questions you have, because the franchisor should have been there and done it all before!

This article will give you plenty of questions to ask.

NB: You may have to sign Non-Disclosure documents and actually apply for a Franchise before you can get answers to some (but certainly not all) of these questions. If you find a franchisor is reluctant to answer these questions, that should tell you something, shouldn't it?

1. Is the Franchisor a Member of the Franchise Council of Australia?

2. Does the Franchise comply fully with FCA Code of Conduct and Member Standards in all regards?

These two requirements are compulsory for membership of the FCA, so you can be assured that if they are an FCA Member, they have already been vetted for compliance with these.

NB: Membership is optional - if Franchisors are members, it may provide a degree of credibility, however, many good Franchisors are not members of the FCA.

3. Was the Business successfully piloted (run as business) by the Franchisor?

4. How long has the Franchise been in operation?

5. How many franchises have been sold?

6. How many franchises are company owned?

7. How many Franchises are there in active operation?

8. How many franchisees have sold their franchise as an ongoing concern?

9. How many active franchisees consistently meet franchise revenue and profit projections?

10. How many legal suits have been lodged by franchisees against franchisor?

11. How many Franchisee council meetings have been held in last 12 months?

12. What marketing is generated by Franchisor?

13. What level of Training is provided?

14. What level of ongoing support is provided?

15. How is training and support provided?

16. What is the makeup of the head office team?

17. What are the Customer profiles?

18. Time and lifestyle outcomes (5 days a week, 7 days a week, etc.)?

19. Is employment of staff required?

20. What guarantees are offered if any, regarding:

a) Marketing

b) Income support

c) Business generation

d) Franchise buyback

21. Can you speak with as many franchisees as you want, and will they give you some contact names and numbers?

22. When you have spoken to a Franchisee with less than 12 months in the franchise, get them to give a rating out of 5, where 5 is highest, 1 is lowest about:

a) Marketing support
b) Level of ongoing Support
c) Level and quality of Training
d) Business generation as a result of franchisor marketing
e) General satisfaction

23. When you have spoken to a Franchisee with more than 12 months in the franchise, get them to give a rating out of 5, where 5 is highest, 1 is lowest about:

a) Marketing support
b) Level of ongoing Support
c) Level and quality of Training
d) Business generation as a result of franchisor marketing
e) General satisfaction

24. Will the Franchisor provide vendor finance or assist with finance (ask if you will require financial assistance)?

25. Is the market for the services or products likely to grow in the future?

26. What market share does the franchise have / how strong is the competition?

27. Is it easy for competitors to start up alternative franchises?

28. What market awareness (branding) does the franchise have in their marketplace?

29. Are they the leading player in the sector?

30. What is their competitive advantage?

31. Is their competitive advantage unique or can it be easily copied?

32. Are they first mover in their industry?

33. What innovations has the Franchisor made in the business model over the past 12 months to stay ahead of competition?

34. Will the business grow in value as business grows?

35. Will I be able to sell my business?

36. Has there been franchisees who sold out for a profit?

37. Is there an exit strategy (sale, employee buyout, company buyback, etc) in the Franchise system for me to get out of the franchise?

38. How many days a week will I have to work?

Hopefully, these questions made you think a bit harder about the franchising opportunities available. But if you just haven’t got the time to make contact and ask all those questions, simply go to the website to sort the sheep from the goats.