Key Questions to ask the Franchisor befor Invest

Written by: Jack Findaro
Last Updated: March 1, 2022
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how to obtaing a franchise

Analyzing franchise concepts can be a daunting task, even for the most experienced of investors. At Visa Franchise are there to help our clients that want to invest, to navigate the franchise research and review process so that they are as informed as possible before making their investment decision.

While our focus is on investment consulting for our clients interested in EB-5, L-1, or E-2 eligible business investments, our franchise investment knowledge can be used by anyone interested in franchise investments.

 


Before having to decide to invest in a franchise, the potential franchisee will have numerous opportunities to speak with the franchise of their choice.


 

Below we have compiled a list of key questions that should be used in the process of deciding whether a franchise is a good option to invest in.

 

List of Questions to Ask Franchisors

 

key question before invest

 

  • What should I know about joining your franchise system?
  • Where do you see this franchise system in 5 years and what steps do you need to take to reach that goal?
  • What competition is there in this field?
  • Consumer Marketplace. How are you viewed in there?
  • What are the strengths of your Franchise?
  • Can you give me a breakdown of all of the expenses associated with getting started?
  • Startup:
  • Operations:
  • Marketing:
  • Explain the contractual responsibilities if I join your franchise system. (i.e. length of the agreement, renewals, etc.)
  • What can I expect to earn if I join your franchise system and does your franchise disclose this amount in your written materials?
  • How much additional capital will I need after I launch my franchise?
  • What does your training program look like? What ongoing training do you offer?
  • If applicable, what goods or services do I have to purchase directly from you, the franchisor, and can I competitively shop for a better deal?
  • Is there an advertising fund that I must contribute to? And what rights do the franchisees have regarding auditing that fund?
  • Protected territories. How is mine defined?
  • How many franchises have my state? Have they all opened? If they haven’t opened, why not?
  • What are your plans to develop my state and how will that impact my franchise?
  • How many franchised units have failed and why?
  • Does the franchisor have sources to assist with financing, real estate, and construction?
  • How many existing franchises are currently for sale?
  • Franchisor sued. How to handle lawsuits?
  • How have previous franchisee/franchisor disputes been settled?
  • What help will I get to run my own business well?
  • How have most franchisees located their franchise locations? Did they use the franchisor’s people or did they find their help?
  • What happens when I want to retire or sell my business?
  • Do I need permission if I want to market my business through any trade groups?
  • What is the biggest complaint from your franchisees?
  • If I sell my business and leave the franchise system, what can I not do?
  • Any Additional Information/Notes

 

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