Top 10 Most Asked Franchise Questions

23/02/2018 08:00 | Start a business

Top 10 franchise questions

Budding entrepreneurs often consider the pros and cons of the franchise business model for a long time before they sign a franchise agreement. Prospective franchisees are hungry for as much franchise information that they can gather before they commit to an investment.

Questions to ask before buying a franchise

A great way for wannabe franchisees to get the support, advice and guidance theyre looking for is to attend one of the many franchise exhibitions that take place around the country.

The shows are attended by franchise professionals, experienced franchisors and like-minded franchisees. You'll get the chance to ask questions and find out more about the vast number of franchise opportunities that are available.

In the meantime, here are 10 of the most asked questions about the wonderful world of franchising.

Question: Am I guaranteed success if I buy a franchise?

Answer: In short, no. Although its true that the franchise business model offers you the opportunity to follow a tried and tested business system which has proven to be successful, this is no guarantee of your success.

Just as with any business, the only way to achieve a profitable franchise is through hard work, dedication and determination. If you follow the franchisors system correctly, show commitment and recruit well, then theres every chance that youll enjoy the many benefits that come with being a franchisee.

Question: What does the franchise recruitment process involve?

Answer: The franchise recruitment process can take anywhere between a couple of weeks and several months. This time should be used for you and the franchisor to collect enough franchise information to be confident that this is the right decision for both parties.

The franchisor will have many attributes that they would like their ideal candidate to possess. These are tested through application forms, interviews and personal checks. As well as the experience and qualities that may be required, having sufficient capital to finance the franchise is a must.

During this period you should also perform your due diligence. You need to be sure that the franchise is the right fit for you. You should also verify that the financial forecasts provided by the franchisor are realistic.

Question: Do I need to show the franchise agreement to my solicitor?

Answer: Before you sign the legally binding franchise agreement, it's essential that you consult a solicitor. Although its true that often the terms of the franchise contract will not be amended, this is not the sole purpose of the review. The point is for you to protect yourself by having a clear understanding of your obligations and restrictions as a franchisee. A specialist franchise solicitor will have the expertise to help you gain a full understanding before you sign on the dotted line.

Question: What fees will I have to pay when I buy a franchise?

Answer: The franchise business model is synonymous with fees. The initial franchise fee usually covers the right to trade using the brand and business system, as well as having access to all necessary training and the operations manual.

Along with the franchise fee, set up costs can also include buying or leasing premises, fitting out of these premises to franchisors specification, equipment, stock and professional fees.

Once your franchise is up and running, its likely that youll also be required to pay ongoing fees. A royalty fee is a regular payment that covers the costs of the franchisors continued support and training. A marketing fee may be required if the franchise has a centralised marketing fund to which all franchisees contribute.

Question: Can the franchisor tell me when my franchise will be profitable?

Answer: Probably the one question that most franchises want the answer to is when will I start making money?. The advantage that a franchise has over an independent business is that they will have experience of other franchises within their network and so will be able to provide a pretty good estimate of when your franchise will break even. Its important to remember though that every franchise is different and many different factors will influence your journey to profitably, so the franchisors forecast should be used as a guide only.

Question: Do I have to like the franchise to become a franchisee?

Answer: There are no reasons why you couldn't run a successful franchise if you follow the franchise model, even if you disliked the business. But the question is, why would you want to? Investing in a franchise is a significant commitment and will involve long hours and hard work. To do this if you're not passionate about the franchise will make the role of a franchisee very challenging.

Question: Who chooses the location of my franchise?

Answer: This depends on the franchise in which you choose to invest. Most of the time, you'll be expected to find a suitable location which is then approved by the franchisor.

Question: Will I get help from the franchisor to run my franchise?

Answer: The whole point of running a franchise is that you have the freedom of being a business owner, with the support and backing of an experienced franchisor. Although youll receive training, guidance and a proven business model as part of the franchise package, youll still be responsible for operating your franchise unit.

Question: Can I buy more than one franchise?

Answer: If your franchisor agrees, then becoming a multi-unit franchisee is a growing trend and is an option available to you if you have ambitions to expand your portfolio. Share your plans with your franchisor and as soon as your first franchise is performing well, adding a second unit may be an opportunity for you to consider.

Question: Can the franchisor take my franchise away from me?

Answer: Yes. If you breach the franchise agreement and dont rectify the wrong in a set period (usually 30 days), the franchisor has the right to terminate the contract. Ensure you know about all the rules and obligations you must adhere to so that you don't risk losing everything.

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