|A key ingredient in any prospective franchiseeâ€™s evaluation of a franchise opportunity is to visit exist- ing franchisees and ask them questions about their relationship with the franchisor. â€œWhat you need to know from franchisees is what the franchisor does that makes it worth the fees,â€ says one franchise consultant. The following questions will reveal how well the franchisor supports its franchisees and the nature of the franchisorâ€“franchisee relationship:
- How much did it cost to start your franchise?
- How much training did you receive at the outset? How helpful was it?
- How prepared were you when you opened your franchise?
- Does the franchisor provide you with adequate ongoing support? How much?Are you pleased with the level of support you receive? What is the nature of this support?
- Is the company available to answer your questions? How often do you contact the company? What is the typical response?
- How much marketing assistance does the franchisor provide? Is it effective? How can you tell?
- Do franchisees have input into the development of new products or services?
- Which of your expectations has the franchisor met? Failed to meet?
- How often does someone from the franchise check on your operation?What is the purpose of those visits?
- What is a â€œtypical dayâ€ like for you? How do you spend most of your time?
- Which day-to-day tasks do you enjoy performing most? Least?
- How much did your franchise gross last year? How much do you expect to gross this year? What has been the pattern of your outletâ€™s sales since you started?
- Is your franchise making a profit? If so, how much? What is your net profit margin?
- How long did you operate before your outlet began to earn a profit?Is your outlet consistently profitable?
- What is your franchiseâ€™s break even point? How long did it take for your franchise to reach the break even point?
- Has your franchise met your expectations for return on investment (ROI)?
- Is there a franchisee association? Do you belong to it? What is its primary function?
- Does the franchisor sponsor system-wide meetings? Do you attend? Why?
- Does the franchisor listen to franchisees?
- What changes would you recommend the franchisor make in its business system?
- Where do you purchase supplies, equipment, and products for your franchise?Are the prices you pay reasonable?
- How much freedom do you have to run your business?
- Does the franchisor encourage franchisees to apply their creativity to running their businesses or does
- it frown upon innovation in the system?
- Has the franchisor given you the tools you need to compete effectively?
- How much are your royalty payments and franchise fees? What do you get in exchange for your royalty payments? Do you consider it to be a good value?
- Are you planning to purchase additional territories or franchises? Why?
- Has the franchisor live dup to its promises?
- Looking back, what portions of the franchise contract would you change?
- What are communications with the franchisor like?
- How would you describe franchiseesâ€™ relationship with the franchisor? How would you describe your relationship with the franchisor?
- Are most franchisees happy with the franchise system? With the franchisor?
- What advice would you give to someone considering purchasing a franchise from this franchisor?
- Knowing what you know now, would you buy this franchise again?
Sources: Based on Carol Tice, â€œHow to Research a Franchise,â€ Entrepreneur, January 2009, pp. 112â€“119; Andrew A. Caffey, â€œAnalyze This,â€ Entrepreneur, January 2000, pp. 163â€“167; Roger Brown, â€œAsk More Questions of More People Before Deciding, Then Plan to Work Very Hard,â€ Small Business Forum, Winter 1996/1997, pp. 91â€“93; Roberta Maynard, â€œChoosing a Franchise,â€ Nationâ€™s Business, October 1996,
pp. 56â€“63; Andrew A. Caffey, â€œThe Buying Game,â€ Entrepreneur, January 1997, pp. 174â€“177; Julie Bawden Davis, â€œA Perfect Match,â€ Business Start-Ups, July 1997, pp. 44â€“49.