The questions to ask your prospective franchisor

These are the questions to ask a franchisor before you invest, Suzie McCafferty, managing director of Platinum Wave, says

We’ve helped to sell a lot of franchises over the years from many different business sectors. Some of the questions we’ve been asked by prospective franchisees, however, have stuck in the mind for the wrong reasons:

“If I don’t like it after the first couple of months, I’m just going to sell it to my mate. That’s okay, right?”

“I’m very interested, but I need to know if you’ll change the logo from green to red? I really like red.”

“I’ve got the money to buy it, so I don’t see why the franchisor needs references?”

We’ve had plenty of sensible questions too, of course. Would-be franchisees tend to be on a spectrum that runs from those looking for an opportunity to achieve a better worklife balance through to those who have few questions beyond: “What’s the average monthly net profit?”

Cold and calculating

An experienced multi-unit operator will decide quite quickly if they think the brand is offering something exciting that the public will like and then they will drill into the figures to see if it’s worth their while - it’s rarely a long decision making process.

That may seem quite cold and calculating to some, but these investors aren’t buying into a dream of being their own boss - they’ve already done that and know franchising works for them.

For the most part, however, prospective franchisees are looking for a chance to go into business for themselves with the added comfort of a proven business system and the ongoing support of a franchisor. If you fall into this category and are currently assessing franchise opportunities, then here are some questions you will want your prospective franchisor to answer. Many of them will be addressed in the marketing literature you’ll have been sent prior to speaking to or meeting with the franchise recruitment team. But you’ll want to expand on those answers until you’re satisfied with the answers and explanations given.

The following list of questions is by no means exhaustive, but it should help you in the first meeting to establish a feel for the company and the people you’ll be dealing with.

Consider what kind of culture you want to be in? Are you looking for a kind, nurturing environment or a highly competitive one? Do you want a lot of support or to be left alone to run your own business?

Once you’ve decided if you and the brand are a good fit, you can then get into greater specifi cs about what’s in the franchise agreement and how much money you might make.

Company specifics

• Who owns the company?
• How long has it been trading?
• When did you start franchising?
• How did your fi rst franchisee perform?
• How many franchisees/ territories do you have?
• How many franchisees/ territories do you want?
• Does the company still operate any non-franchised territories?
• How many franchisees have left the network?
• Find out how many failed, how many didn’t renew and how many were exited from the network by the franchisor.
• What is your vision for the business for the next five and 10 years? Establish if the business is likely to stand still or evolve, offer new products or services, refresh its brand, adopt new methods, etc. How will you feel about this if/ when it happens? Would you still want to be part of it? Do you feel the franchisor’s ambitions for the future match your own, as this will be at least a five-year commitment for you?
• Who are your biggest competitors and what are their strengths and weaknesses?
• What are your biggest strengths and weaknesses as a company?
• Are there any opportunities or challenges currently facing your sector or business, or are there any on the horizon?
• Are you active in your sector (eg, trade associations, awards, sponsorships, steering groups, media contributor)?
• Do you belong to a franchise association? Why? Why not?

Support and culture

• Tell me about the franchise support team? What are their roles? Find out about the career backgrounds of the people who will be responsible for supporting you and your business.
• Who would be my main contact as a franchisee? Where are they located?
• How do you communicate with the network? Establish things like how often you’ll see the franchisor, how and why? Are there meetings - face to face, regional, national?
• Is there a franchisee council? Try to get an impression of whether the franchisor sees this as a good thing or a necessary evil. Ask for examples of the positive effect it has had.
• Tell me about the initial training programme. How has it developed over the years? How often is it reviewed? Get a sense of whether or not the franchisor is proactive or reactive in terms of how it supports its franchisees at the beginning.
• Is there a structure to the ongoing support you offer or is it ad hoc? How do you help underachieving franchisees?
• How do you help your top performing franchisees?

The answers to the last two questions should reveal a lot about the franchisor/franchisee relationship and culture. Is it a case of sink or swim? Is it a hands off approach or are franchisees encouraged and supported to grow their businesses?

Some brands will have reward and recognition programmes for their networks designed to continually motivate franchisees to keep pushing.

• Do any of your franchisees have multiple territories? Has it worked out well for them? Is it encouraged?
• What are the attributes of your most successful franchisees? This will give you a good idea of how well the franchisor actually knows its franchisees. Do the answers go further than: “They work harder than everyone else and they follow the system”?

Something extra

While these questions are more about establishing a fit for you in terms of personality, ethics, drive and culture, they will also help you decide if this franchisor is likely to offer you that ‘something extra’ you’re looking for from buying a franchise, as opposed to starting your own business from scratch.

Is its aspirations for you in line with your own? Is the franchisor going to help you get to where you want to go?

There are hundreds more questions to ask and things for you to get to the bottom of, but here’s one last piece of advice: never forget that securing your perfect franchise isn’t only your decision to make.

A good franchisor will be scrutinising you from the first email or phone call. You want a franchisor who cares as much about making the right decision as you do - and the best ones always do.

About the author

Suzie McCafferty founded Platinum Wave in 2010, after gaining more than 10 years’ experience in the engine room of franchising, first as a franchisor who built her own retail brand from a single store to a network of over 60 outlets in six countries, then as the franchise director and board member of a multi-million pound division of a recruitment plc. She is the chairperson of the British Franchise Association’s Scottish regional forum.