Franchising

You are interested in a franchise business opportunity, and would like to own, operate and manage your franchise business, or looking at a franchise as an investment opportunity. Yes, you have read the brochures and literature. They all sound like the ideal franchise. We all know that all franchises are not the same. How does one really narrow down the details and ask the right questions to be able to successfully evaluate which franchise is really right for you? Is a more expensive franchise better? Or, are there really good value priced franchises that would be a profitable business decision for you? Those are just a few example questions that are on the minds of each Franchisee as they go through the decision process. To make your evaluation process more insightful,
here are thirteen "Must Ask" questions every potential franchisee should ask the franchisor/seller before you buy the franchise:

1. Is this a franchise business I can successfully open, operate, and make it a success? Whatever franchise you choose, be sure it is something you are interested in and like doing. Discuss this with your franchisor to find out the "in's and out's" owning and operating their franchise. For instance, if you like working indoors, you should not be buying a franchise that requires working outside, such as a landscaping business.
2. Does the seller/franchisor own and operate one or more of their own stores? This seems like a simple question, but it is an important one. A really good indication of the success factor and business profitability of the franchise is if the owner(s) operate one or more of their own franchise businesses.
3. What is the sellers/franchisors experience in developing this franchise business, and/or any other businesses? An entrepreneur that has had franchise success in business usually has multiple successes in other businesses they have launched. Understand the franchisors motivation and drive to ensure your franchise is a success.
4. What are your customer's reaction and satisfaction with the quality and price of the products sold by your franchises? It is always important to understand if the customers you will serve really do like the products being sold, and they are high quality products offered at a competitive price.
5. How many franchise stores are currently operating, and where? This gives you an idea of the overall success of the franchise operation, and where they are located. This also gives you an idea of locations that you might want to consider for your franchise where none exist.
6. Do you provide references from existing franchisees? Talking first hand with a franchisee of the franchise business you are interested in is invaluable.
7. Have any of your franchisee's bought more than one of your franchises? If so, how many? If the franchise is really successful, many times there will be business entrepreneurs that know the value and market of a successful franchise and open multiple profitable stores and manage them.
8. Is your franchise a "turnkey" business, i.e., does it include the franchise signage and logo for your store? Does it include any special display stand fixtures needed to sell the products? Often franchisors sell a franchise without the franchisee fully understanding any "hidden costs" of opening their store.
9. What are the terms and conditions of the franchise license fee? It is a very important to understand if the franchise fee is a one time charge or are there other fee's in addition to the franchise license fee.
10. Is there any monthly or annual percent of sales commission charge in addition to the franchise license fee? Many franchises do require that a percent of sales commission if paid back to the franchisor for a specified period of time.
11. Are there any royalty fees to any of the manufacturers of the products you sell? Many franchises require you to pay royalty fees on top of their franchise fee. These fees are royalty fees that are required to be able to sell the licensed products from the manufacturer.
12. Are there advertising fee's associated with the brand name of your franchise that I must pay in addition to the franchise license fee? In many large franchise businesses, they require you to contribute a percent of sales, or a monthly set fee amount to cover the companies advertising of their products for the areas they serve.
13. Do you provide hands on training in one of your Corporate owned franchise stores, and for how long? Having hands on training in a real franchise store environment is invaluable. Understand if there are charges for the training, how long the training is conducted, and the level of support that will be provided up through and after your grand opening of your new franchise.

The questions above are not exhaustive by any means, and of course, provide no guarantee that your franchise endeavor will be a success. However, being equipped with these questions will give you a valuable insight on whether or not a franchise opportunity under $50,000, or for any dollar amount will be a profitable business opportunity that you can own, manage, and run successfully!