Key Questions to ask the Franchisor

Last Update: June 14, 2017

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By: Jack Findaro, Product Development Director at Visa Franchise

Overview

Analyzing franchise concepts can be a daunting task, even for the most experienced of investors. For that reason we at Visa Franchise are there to help our clients 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 make the decision 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 investment option.

List of Questions to Ask Franchisors

  • What should I know about joining your franchise system?
  • What are the strengths of your Franchise?
  • Where do you see this franchise system in 5 years and what steps are being taken to reach that goal?
  • What competition is there in this field?
  • How are you viewed in the consumer marketplace?
  • Can you give me a break down 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 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?
  • What does your training program look like? What ongoing training do you offer?
  • How much additional capital will I need after I launch my franchise?
  • 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 franchisee’s have regarding auditing that fund?
  • What is my protected territory and how is it defined?
  • How many franchises have been awarded in my state and 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?
  • How many existing franchises are currently for sell?
  • Does the franchisor have sources to assist with financing, real estate, and construction?
  • Has the franchisor been sued or being sued?
  • How have previous franchisee/franchisor disputes been settled?
  • How have most franchisees located their franchise locations? Did they use the franchisor’s people or did they find their own help?
  • What will you do to help make sure that I am properly set up to run my own business?
  • What happens when I want to retire or sell my business?
  • What is the biggest complaint from your franchisees?
  • Do I need permission if I want to market my business through any trade groups?
  • If I do sell my business and leave the franchise system, what am I forbidden to do?
  • Any Additional Information/Notes

About the Author:

Jack Findaro is the Product Development Director at Visa Franchise. He and his team focus on the research, analysis, due diligence, and ongoing relationships for the different franchises and businesses in Visa Franchise’s portfolio. Before Visa Franchise, Jack worked at Miami-based global franchise company Restaurant Brands International, parent company of global iconic brands such as Burger King, Tim Hortons, and Popeyes. He worked within various departments, including Global Finance, Investor Relations, and Global Development. His experience at Restaurant Brands International has enabled Visa Franchise to provide deep insights to their foreign national clients, many of whom are interested in investing in a franchise in order to obtain their investor visa for themselves and their family.