Tough Questions Every Potential Franchisee Should Ask

Opening a franchise is an excellent way to become a business owner, but it is by no means foolproof. As a franchisee, it’s crucial to have a clear head and keep your emotions in check. You’ll face vital decisions that require asking the right questions of your potential franchisor. These insightful questions will help you identify any red flags and make informed strategic decisions as you embark on this significant journey in your professional life. Here are the tough questions you should consider:

1. What are the pros of owning a franchise?some text
   • Higher chance of success: A franchise is tied to a brand name with a proven track record. This is a considerable advantage! The brand already has products on the market that have been tried and tested, along with systems in place to ensure smooth operations. You won't need to work as hard to attract new customers or convert them as you would when starting an unknown brand. Franchises are ideal for entrepreneurs who want to minimize risk.
   • Lots of support: Another benefit of owning a franchise is the extensive support you'll receive in getting your business up and running. Additionally, you’ll get ongoing advice and assistance with managing your business. When you buy a franchise, you gain access to all the necessary tools, supplies, and training. Typically, this will also cost less since franchisors often secure better deals with suppliers for bulk purchases.
2. What are the cons of owning a franchise?some text
   • Limited decision-making freedom: Franchisees often find it frustrating that they have little freedom to make their own decisions. Those who enjoy thinking outside the box may find this restrictive. Franchisors typically maintain strict guidelines to ensure brand consistency, which limits experimentation.
   • Fees: Purchasing a franchise, especially a well-known brand, can require significant upfront investment. You may need a loan and working capital for your business. Monthly licensing fees to the franchisor are one of your most considerable expenses, often based on your business's monthly revenue.
3. What does the owner say when I ask them tough questions?some text
   • Connecting with like-minded entrepreneurs can be exhilarating, but it may also cloud your judgment. It’s essential to ask owners tough questions and carefully observe their responses. You should gain a thorough understanding of who you’re partnering with. Key questions include: What is the bottom of the unit performance bell curve? How does the franchisor address underperforming units? Are system breakdowns the exception or the norm? Pay attention to how enthusiastic franchise management is about helping franchisees succeed and grow. Look for proof to support their claims, and speak to multiple owners to compare their experiences.
   • Assess the franchisor's openness when you ask questions. Do their responses feel trustworthy, or do they raise concerns? You're not only evaluating the business's risk but also gauging the strength of the franchisee-franchisor relationship. Honest and clear communication is crucial, as you'll be working closely with these individuals.
4. What is more important: selling units or opening units?some text
   • Many prospective franchisees use the speed of new unit sales to measure success. However, making money in the long term is far more critical than simply opening new locations. Ensure that profit generation is prioritized over the number of units sold. A well-planned rollout involves providing new companies with on-site training and other support. Avoid entering a franchise without a clear plan; otherwise, you risk getting stuck in the start-up phase. Speak with existing franchisees about their experiences and ask what they would have done differently based on their knowledge now. This preparation will help you avoid unpleasant surprises.
5. What motivates their influencers?some text
   • Strong franchises leverage a wide network of influencers—individuals loyal to the brand who recommend it within their circles. Understand how these influencers operate. Is it solely word of mouth? Are they compensated? Is there training involved? Franchisees typically offer the best insights, but approach their advice with caution, as their views may be biased or incentivized. Talk to various owners, trust your instincts, and don't hesitate to ask uncomfortable questions.

The bottom line
Buying a franchise is a significant investment. While there are numerous pros and cons, it could be an opportunity worth pursuing. Maintain a healthy level of skepticism and remember that asking tough questions upfront is vital. This process will help you determine whether you want to proceed, even if the answers aren’t what you hoped for. Ultimately, you’ll gain a clearer sense of what to expect and what you’re committing to in the long term, preparing you to grow a successful franchise.