If you’re looking to buy a franchise, it’s crucial for you to learn how to do it in the smartest way possible.
One of the things you need to do is get as much information about the franchises you’re looking at-from the company’s point of view.
In this post, I’m going to show you how to go about doing it.
But first, some facts.
1. The job of a franchise sales representative is to sell franchises.
2. Once the sale is made, the sales representative is handed a rather generous commission check.
3. As a potential franchise buyer, it’s your job to gather pertinent information about the franchise opportunity he’s representing. That way, you can make an informed buying decision.
4. The best way to get the information you need on the franchise opportunity you’re investigating is to ask questions. The right questions. Like the ones I’ve listed below.
5 Questions to Ask Franchise Representatives
The questions below are must-ask questions. They’re designed to help you quickly get the facts you need on any franchise you’re interested in. They’re to be used when you’re on the phone with franchise sales* representatives.
*Also known as franchise development representatives.
1. Who are your biggest competitors, and what do they do well?
It’s important for you to know who the players are in the business sector you’re thinking of becoming part of.
Plus, it’s good to know who you may end up competing with in your local market. So ask this question.
2. Do you welcome suggestions on new products/services from franchisees?
The reason I want you to ask your rep this question is so you can get a feel for what the company is like.
For example, is the franchisor super-rigid, and set in their ways?
Or is the franchisor open to new ideas from franchisees?
Tip: Don’t buy a franchise business if you’re the type of person who likes to spend a lot of time and energy coming up with new ideas or processes. That’s not what franchisees do.
Franchisees are the ones who implement and follow the business system. One that someone else has already put into place. If you can’t see yourself doing that, you’re way better off starting your own business from scratch.
3. What short-term and long-term plans does the company have?
Good franchisors have a plan. Your job is to find out what it is.
First, ask your rep what the franchisor is working on now.
For example, are there specific marketing promotions in the works? Is new technology being introduced soon? What kind?
Next, ask what the long-term plans for the brand are.
For instance, are new store designs being discussed? (Franchisees are the ones who pay for new store designs/upgrades) Are new products/services in the works?
To be sure, you may not get detailed answers to these questions, as the franchisor may not want anyone to know of their plans yet. But ask them anyway. You never know what you’ll find out.
4. Are there ongoing fees, and if so, what are they?
It’s important to know how much you’ll be paying the franchisor month in and month out. Especially since most franchise agreements are at least 5 years in length.
For starters, you need to find out what the royalty percentage is, and what it’s based on.
Then you need to find out how much the marketing fee is.
Note: some franchisors charge business development fees, call center fees, and/or technology fees, too.
I’m not saying there’s anything wrong with fees like that; just find out what they’re for and how much they cost every month. You’ll be able to ask the franchisees if they feel the fees are fair.
5. What is the #1 thing I need to do in order to be a successful franchisee in your system?
Hardly anyone asks this question.
That said, your sales representative may find it challenging to give you anything but a cookie-cutter answer. Like:
“All you have to do is follow the system, and you should be able to be successful.“
But maybe you’ll get lucky and hear something deeper. As a matter of fact, your rep may know exactly what it takes to succeed and will gladly tell you. If so, great. If not, ask the franchisees.
Because they know.
The Franchise King®, Joel Libava, is a franchise ownership advisor, and the author of several books on franchise ownership. His newest one, “The Definitive Guide to Franchise Research,” is a must-read for anyone thinking of buying a franchise.