7 questions to ask a franchisor before you invest

What questions should you be asking before you hand over your hard earned cash?

Franchising always starts by conducting thorough research and enquiring into potential franchise opportunities. It’s often here that you reach your first significant milestone – a face-to-face meeting with your potential franchisor and their team. The goal of this meeting is to ascertain whether their franchise really is the one for you and vice versa.

For instance, are you aligned in terms of knowledge, experience, attitude, and culture? It’s crucial to compile a list of questions that you intend to have answered during this first meet because the more organised you are walking into this meeting, the more sure you will be coming out of it.

Are there other people in the franchise network who are generating the sort of income that will support my desired lifestyle?

The appeal of franchising is often the combined financial and lifestyle advantages it offers entrepreneurs – particularly those with families. Different franchises attract people with varying goals and experiences. Enquire about franchisees in similar living situations and understand how much income they’ve successfully generated. If you find these franchisees are achieving your financial aspirations while maintaining a similar lifestyle to yours, the franchise could be a good fit.

Are there any franchisees with similar skills who are operating successfully already?

Look for franchisees who have similar skillsets to you and ascertain whether they’re thriving in the network. If they’re doing well, it’s a good indication that your expertise can be leveraged to achieve similar positive outcomes.

However, regardless of skillset, be mindful that most franchises will provide the relevant training to ensure every franchisee starts off on the right foot. For example, at Petpals, we encourage everyone with a passion for pets to consider us a viable opportunity. Beyond this, we tailor training and support to individuals, who come from a range of previous careers.

How does the franchise stay up to date on industry trends and adapt accordingly?

Ask about the franchisor’s approach to staying on top of industry trends and adapting the business model accordingly. Their response should demonstrate awareness of market dynamics and readiness to innovate.

A franchisor who proactively monitors trends and implements changes can equip franchisees with current strategies that align effectively with evolving demands. By actively evaluating the franchisor’s approach early on, you can understand whether they’re forward-thinking, which is a vital trait for sustaining success within a franchise.

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What kind of ongoing support is available to franchisees once they’re up and running, and how is it provided?

Ongoing support shows a franchisor is responsible and will be committed to your success beyond the initial setup phase. This approach ensures consistency among franchisees, establishes a foundation for knowledge sharing, and cultivates a community that encourages collective growth.

Many franchisors organise regular conferences where franchisees, head office members, and others in the network come together to share insights and collaborate on strategies that foster growth and success

Are there seasonal demand fluctuations for services?

Demand fluctuations for certain services are expected and vary depending on industry. Ask the franchisor if there are any seasonal trends in the industry which can help you plan for busier or slower periods as well as make informed staffing and marketing decisions early on.

Understanding how a franchise capitalises on specific seasonal trends will provide you enough evidence to gauge the franchise’s adaptability and resilience. Furthermore, establishing customer loyalty and retention rates will give you an idea of the franchise’s ability to build long-lasting client relationships, regardless of seasons

What territory rights will I have?

Enquire about territory rights to understand your designated area’s market landscape, competition, and growth potential. This means you can begin planning operations within a defined scope and align your strategies with specific market conditions and opportunities.

Knowing the exact market size and identifying the customer base will help assess the franchise’s viability in your chosen location. It’s also worth noting some franchises provide exclusive operating territories, which means franchisees within the network aren’t competing with one another.

Can I speak to current franchisees?

Consider asking to speak to a new and an established franchisee to gain a better perspective of the business. While quizzing the franchisor is essential, speaking with existing franchisees will show you the day-to-day challenges and benefits within the network.

Long-standing franchisees can share insights into the business’ practical aspects, helping you assess the alignment between your expectations and the actual responsibilities. Meanwhile, conversations with new franchisees can reveal the effectiveness of the franchisor’s training and guidance in the start-up process. If a franchisor readily connects you with existing franchisees it shows they are confident in their system and committed to open communication.

You’ve made your decision and committed to the franchise. Now what?

Crafting a comprehensive business plan is the next crucial step. This plan serves as a roadmap, guiding you through the intricacies of operating your chosen franchise. Creating a business plan for many franchisees, especially those new to the industry, can be daunting. However, it’s a vital tool for success.

• Outline the unique aspects of your chosen franchise and detail your strategy for success.
• Consider factors such as market analysis, competition, and your target audience.
• Specify your short-term and long-term goals. • Define the key performance indicators to gauge your progress.
• Save as a living document: easily accessible and regularly reviewed.

While a franchisor may provide a framework for your business plan, it’s crucial to personalise it based on your territory, skills, and goals. Seek outside consultancy if needed, especially for financial projections and market analysis.

A well-rounded business plan covers economic forecasts, marketing strategies, operational procedures, and contingency plans. It should be adaptable, accounting for seasonal fluctuations and industry trends.

Refer to your business plan consistently, updating it as needed and aligning your actions with the outlined strategies. This forward-looking approach, combined with ongoing support from the franchisor, positions you for a successful journey within your chosen franchise.

Remember, a well-crafted plan enhances your understanding of the business but also serves to set aspirations.

The author: Kevin Thackrah is managing director of Petpals.
Image credit: Shutterstock/Drazen Zigic