Thinking about becoming a franchise owner? It can be a lucrative investment. Learn what questions to ask when searching for the right opportunity. A good franchisor will be happy to answer these nine questions.
What Characteristics do Top Performing Franchisees Have?
When the franchisor is describing their top franchisee, consider if those are traits and skills that you have. If not, maybe this industry isn’t right for you. In addition, ask the franchisor what specifically about your background makes you a good fit for their brand.
What’s Included in Initial Investment?
Find out precisely how much you must pay to start and what those costs cover. Item 5 of the Franchise Disclosure Document (FDD) generally outlines what’s included in the initial investment. International Franchise Association notes it typically includes franchisee fees, furniture, equipment, lease deposits, training, advertising, grand opening expenses, travel expenses, and inventory.
What Ongoing Expenses Should I Expect?
With any business, there are ongoing fees. Item 6 of the FDD lists any costs you’ll continuously pay while running a franchise, including royalties and advertising. When discussing these expenses, ask the franchisor how they use your funds for royalty and advertising costs and how it benefits the franchise as a whole. You may also want to examine how these funds are layered into the company’s overall strategy, as well as how it may affect you, the franchisee, at a local level.
What Market Research Was Performed?
The franchisor defines your operating territory. Ask the franchisor how they came up with this area and what research supports their reasoning for why a location will thrive here. You’ll want to be confident it’s centered on the target market.
Training: Who, What, Where, and How Much?
Essential questions to ask about buying a franchise include ones about the brand’s training.
• Who holds the training?
• Who can attend?
• Where is it held?
• How much does it cost?
• What’s covered in training?
• Are there any additional training materials provided?
For example, Scissors & Scotch, a barbershop franchise, is opening a brand-new training center in Kansas City, Missouri. They will not only train you, but barbers and stylists as well.
What Ongoing Support is Provided?
Support is one of the most significant parts of franchising, and it’s one of the biggest contributors to a franchise’s cost. Inquire as to if they offer field assistance, like a franchise consultant, to guide you along the way. Having someone to lean on can be especially important during the first year.
Understand their advertising and marketing efforts, including consumer advertising and national and regional campaigns. You’ll want to take into account what the brand guidelines are and stay within those parameters when advertising.
What Are Your Growth Predictions?
Most of the time you can find how long a brand has been franchised online, so instead, ask for growth records and future growth plans. A brand experiencing rapid growth can’t always support its franchisees or sustain that growth.
It’s also important to note that just because a brand has yet to be around long doesn’t mean it not successful. While a new franchise that will be successful is harder to find than an established brand, there are significant benefits to buying into a new brand. There will be more room for you to grow and expand, and it’s typically less expensive.
At Scissors & Scotch, we’re in a high-growth mode. We have 23 stores open now, with 20 more on the way. Our business model is ready for this growth, and our specialized services are unique and in demand. Clients are looking for an upscale haircut experience; once they receive one, they keep coming back.
Can I Talk to Current Franchisees?
Once you set up a meeting with current franchisees, ask them these questions, a list compiled from Franchise Business Review:
• Did opening your location go as planned?
• What support does the franchise offer?
• Was the initial training effective and valuable?
• What kind of day-to-day support is provided?
• How soon did you make a profit?
• Has your revenue been similar to what the franchisor said it would be?
• Looking back to your start, would you have done anything differently? Is there anything you wish you’d known going in?
These questions are great to compare to what the franchisor has already given you. If they don’t match up, that’s a red flag for the brand.
From Signing to Opening, How Long Does it Take?
You are spending a lot of money to skip the step of creating systems and processes for a new business. Understand that the process takes time, you’ll want to set realistic expectations and have a discourse over how long it will take from when you sign on the dotted line until you open.
Why Scissors & Scotch?
True, we’re fairly young in the franchise world, but we’re here to stay. While we only started franchising five years ago, we have a set of rockstar systems and procedures to help our franchisees build a successful business. Have questions to ask about buying a franchise with us? We have a professional team here to answer them all, including about the franchise process.
Our 20 locations stretch across nine states. We have dozens of locations sold or in the development stages. We’ve been named to Entrepreneur’s Top 150 New and Emerging Franchises list.
So, ready to join us? Get started now.