38 Top Questions to Ask

Buying a Franchise is a huge step, just like buying any19. Is employment of staff required?
business.20. What guarantees are offered if any, regarding:a)
The best part about a franchise, though, is that youMarketingb) Income supportc) Business generationd)
should expect a great track record and the answersFranchise buyback
to any and all questions you have, because the21. Can you speak with as many franchisees as you
franchisor should have been there and done it allwant, and will they give you some contact names
before!and numbers?
This article will give you plenty of questions to ask.22. When you have spoken to a Franchisee with less
NB: You may have to sign Non-Disclosure documentsthan 12 months in the franchise, get them to give a
and actually apply for a Franchise before you can getrating out of 5, where 5 is highest, 1 is lowest
answers to some (but certainly not all) of theseabout:a) Marketing supportb) Level of ongoing
questions. If you find a franchisor is reluctant toSupportc) Level and quality of Trainingd) Business
answer these questions, that should tell yougeneration as a result of franchisor marketinge)
something, shouldn't it?General satisfaction
1. Is the Franchisor a Member of the Franchise Council23. When you have spoken to a Franchisee with
of Australia?more than 12 months in the franchise, get them to
2. Does the Franchise comply fully with FCA Code ofgive a rating out of 5, where 5 is highest, 1 is lowest
Conduct and Member Standards in all regards?about:a) Marketing supportb) Level of ongoing
These two requirements are compulsory forSupportc) Level and quality of Trainingd) Business
membership of the FCA, so you can be assured thatgeneration as a result of franchisor marketinge)
if they are an FCA Member, theyhave already beenGeneral satisfaction
vetted for compliance with these.24. Will the Franchisor provide vendor finance or
NB: Membership is optional - if Franchisors areassist with finance (ask if you will require financial
members, it may provide a degree of credibility,assistance)?
however, many good Franchisors are not members25. Is the market for the services or products likely
of the FCA.to grow in the future?
3. Was the Business successfully piloted (run as26. What market share does the franchise have /
business) by the Franchisor?how strong is the competition?
4. How long has the Franchise been in operation?27. Is it easy for competitors to start up alternative
5. How many franchises have been sold?franchises?
6. How many franchises are company owned?28. What market awareness (branding) does the
7. How many Franchises are there in activefranchise have in their marketplace?
operation?29. Are they the leading player in the sector?
8. How many franchisees have sold their franchise as30. What is their competitive advantage?
an ongoing concern?31. Is their competitive advantage unique or can it be
9. How many active franchisees consistently meeteasily copied?
franchise revenue and profit projections?32. Are they first mover in their industry?
10. How many legal suits have been lodged by33. What innovations has the Franchisor made in the
franchisees against franchisor?business model over the past 12 months to stay
11. How many Franchisee council meetings have beenahead of competition?
held in last 12 months?34. Will the business grow in value as business
12. What marketing is generated by Franchisor?grows?
13. What level of Training is provided?35. Will I be able to sell my business?
14. What level of ongoing support is provided?36. Has there been franchisees who sold out for a
15. How is training and support provided?profit?
16. What is the makeup of the head office team?37. Is there an exit strategy (sale, employee buyout,
17. What are the Customer profiles?company buyback, etc) in the Franchise system for
18. Time and lifestyle outcomes (5 days a week, 7me to get out of thefranchise?
days a week, etc.)?38. How many days a week will I have to work?