Although there are tons of questions that you should keep in your arsenal, here are 5 questions we think you should ask before investing money into a franchise.
Investing time and money into a franchise opportunity is a major decision. Taking the time to sit down and thoroughly research each business is very important. Find something that you could see yourself happy doing. Same issues could turn into big issues, so finding one that has little to no conflict with you and your life is of the utmost importance.
Considering the Brand name could be, but doesn’t always have to be, a question you should discuss. A recognizable brand name, such as NAPA Auto Parts, is easier to recognize than lesser known brands. Having a business with a recognizable trademark/brand name makes marketing and connecting to customers that much easier.
You should also stop to think about how the brand will be received in the territory you want to do business in. Take for example the protests you may hear about concerning Wal-Mart or McDonald’s in smaller towns. Although Wal-Mart isn’t a franchise, it helps demonstrate that even though you may think people will want/need a certain type of business in their city, that’s not always the case. People are very vocal when they disapprove of a business.
Success rates are one of the easier ways to find out how healthy a business opportunity is. How many businesses are continuing to thrive? How many had issues and had to close their doors? Another great way to look into success rates is to talk with existing franchisees. When you meet with an existing franchisee, try to get their opinions on how the business is run. What is relationship like with the Franchisor? What kind of issues did they run into during their first year?
Almost all franchisors offer some type of training and support. It’s imperative to find a franchise that offers some kind of training program and support. You wouldn’t want to jump into a business opportunity without having the knowledge to make a profit would you?
There are many fees in business and knowing which ones you’ll be paying in important. Some of the fees involved are royalty fees and franchising fees. You’ll need to find out if these are by month, quarter, or year. Theses extra fees should be included when making a budget estimate for your first year in business.