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Ask the Franchisor

Ask the Franchisor

 

WHAT SHOULD I ASK THE FRANCHISOR 

Where will they be located? 

  • What is the success rate of existing franchises?  

  • What method is used to protect franchisees from poorly performing franchises?  

  • Is there a franchise owners association? 

  • Is there a franchise advisory council?  

  • Who owns the trademarks, service marks, etc., and are they federally registered?  

  • Are there any disputes pending or threatened against the trademark.   

  • Has the franchisor complied with the FTC and state disclosure laws?  

  • Are any senior management or key personnel leaving the system?  

  • Does this company compete with the franchisees in the marketplace?  

  • Will the franchisor finance any of the costs?  

  • Is the franchisor willing to negotiate the terms of the franchise.   

What is the total investment required to own a franchise?  

  • franchise fee 

  • furniture, fixtures, and equipment 

  • leasehold improvements 

  • lease deposits 

  • other deposits 

  • franchise training 

  • travel expense 

  • supplies 

  • advertising and brochures 

  • grand-opening advertising 

  • inventory 

  • pre opening staff costs 

  • working capital until breakeven 

  • working capital - living expenses 

  • other  

What are the continued financial costs, the basis used for calculation, method of payment and frequency of payment?: 

  • royalties 

  • advertising 

Must the franchisee purchase products or services from the franchisor?: 

  • Does the franchisor earn income on purchases?  

  • How much does the franchisor earn? 

  • How are the products distributed?  

  • How long does it take for the orders to be filled?  

  • What other initial or continuing services does the franchisor provide?  What do these costs?  

ABOUT CONSUMER RESEARCH AND MARKETING: 

  • What type of consumer research has the company conducted.   

  • What were the results?  

  • Has the franchisor conducted any market studies on the territory to ensure that it can support a franchise?  

  • What are the demographics required to support a franchise?  

  • What are the traffic counts required to support a franchise?  

ABOUT TRAINING: 

  • What are the location, duration and additional costs of initial training?  

  • Who must attend the training? 

  • What is the cost of additional staff attending training? 

  • What is the training curriculum?  

  • Who conducts the training and what are their backgrounds?  

  • Who pays for transportation, room and living expenses?  

  • Does the franchisor provide training materials for training new staff in addition to the operations manuals?  

  • Does the franchisor provide hands-on assistance during the pre-opening, grand opening and initial period?  Of what type, duration and cost?  

ABOUT PRODUCTS AND SERVICES: 

  • Are there any new products or services under consideration for addition to the franchise? 

  • When are they going to be introduced  

  • what is the estimated additional cost for adding the new products or services? 

  • Are there any restrictions on the distribution or sale of the product?  

  • Is there a guarantee or warranty program? 

  • How is it administered and what is the cost?  

  • Is there a minimum that must be purchased?  

ABOUT OPERATIONS: 

  • What are the roles and responsibilities of the field staff? 

  • How many locations does each franchise consultant work?  

  • What is the background of the franchise consultant I will be working with?  Can I meet that person before purchasing the franchise?  

  • How often does the field staff visit a franchisee's location?  

  • What is the additional cost of field services if the franchisee requires it? 

  • Exactly what kind of assistance is given? 

  • What kind of supervision or quality control is there? 

  • What, if any, is the charge for assistance?  

  • What kind of business management systems are provided to boost sales and profits?  

ABOUT ADVERTISING AND MARKETING: 

  • What type of consumer advertising does the company recommend?  

  • What types of cooperative advertising programs are being used?  

  • What percentage of sales is recommended or required for advertising or marketing?  

  • How do the franchisees obtain their sales leads or customers? 

  • What is the franchisor's national/regional advertising program and budget? 

  • What portion of the national/regional advertising contribution is used for administrative/corporate/agency expenses and fees?  

  • What are the primary advertising/marketing vehicles? 

  • What is the grand opening advertising program and cost?