The journey into franchising is an exciting one. But before you sign anything, you should be sure to ask the following questions to your prospective franchisor, ensuring you get a full picture of the company and what any agreement entails.
On their business
- How long have you been franchising?
- May I speak with your franchisees, and may I choose who?
- What does your head office support team comprise of, and can I meet them before I start my business?
- How many franchisee failures have there been since you started?
- How do you choose your franchisees? Do you turn people away?
- How much is the franchise fee, and what does this include?
- How much working capital will I need?
- May I see financial projections and are these based on actual performance within the network?
- Did you run a pilot or company owned franchise before you launched? If not, why not?
- Can you assist me with raising finance and will the finance company require security?
- What ongoing fees do you charge, and what are they for?
- Do I have to buy products from you and if so, do you take a commission? Does this include equipment too?
- What do you spend on marketing / advertising, and do I have to contribute?
- Will there be a promotion when I launch my business, and is this included in my franchise fee?
- Where is the training, and do I pay for that?
- Once my business has started, what continuing services will you provide me with?
- Can I see a copy of the franchise agreement?
- Can I sell my business? Are there any restrictions that affect my rights to do so?
- How long is the franchise granted for? And what happens at the end of the agreement?
On your involvement
- Can I end the agreement early / terminate the contract?
- What point of sale and promotional literature do you supply? And do I have to pay for this?
- Will I own the equipment necessary to operate the business once any finance has been cleared?
- Do I have to commit to refurbishment / redecoration and equipment replacement?
- Do I look for a premises or do you find them for me?
On communication & operations
- What systems do you have in place for keeping franchisees in touch with you and each other? Do you hold regular franchisee meetings?
- Do you provide instruction and operation manuals?
- If I run into operational problems I am unable to solve, what help and support can I expect?
- Are you a member of the British Franchise Association? If not, why not?