20 HARD HITTING QUESTIONS

When it comes to considering a franchise, it pays to be curious. Ask questions of the franchise, but first look at your own situation and expectations.

It pays to be curious so ask yourself and others the tough questions.

You are excited about your future and can’t wait to get stuck into running your own franchise. But hold on... asking some difficult questions before you get too far down the track can prepare you for what lies ahead.

Here are 20 questions you should be asking, and you can find plenty more to consider if you visit www.franchisebusiness.com.au. As well as questions to ask the franchise business, first there are 10 questions to ask yourself...

HOW READY ARE YOU TO FOLLOW RULES AND PROCEDURES ON A DAILY BASIS?

Franchising relies on compliance at every level, and to run a successful business you’ll need to follow the steps defined. There really is little point in trying to do things your own way if a tried-and-tested system is already in place.

DO YOU CONSIDER YOURSELF A TEAM PLAYER?

As a franchisee, your time and efforts will be focused on growing your business.

One of the benefits of a franchise is the knowledge on hand among other franchisees and the franchisor team. Many franchised businesses expect knowledge-sharing to be part and parcel of being a franchisee. When it comes to changes to the business you might not agree with, you will need to show your team spirit and accept the new way.

HOW HARD ARE YOU PREPARED TO WORK AT THE BUSINESS?

There is no golden rule to the amount of time you need to be working in the business, but it is accepted across the franchise community that no success is achieved without hard work. What that looks like depends on you, whether you want reduced working hours for a better work/life balance or you are striving to fulfil your ambitions and are prepared to put in the hours. What is important is understanding your needs and how to match them in a franchise.

IS YOUR FAMILY SUPPORTIVE?

You may not yet have raised with your nearest and dearest the option of buying a franchise. It is an important step, though, to ensure you have strong support from family and friends because there will be hardships, missed family events, long hours and possibly financial constraint as you work to build the business. Having the backing of your loved ones and sharing the vision and goals will make the process easier, and reduces the likelihood of family disputes in tough times.

ARE YOU PREPARED TO UNDERSTAND THE FRANCHISING CODE OF CONDUCT

AND RELEVANT DOCUMENTATION?

Of course, no-one likes spending hours ploughing through documents, but buying a franchise is a legal commitment. Because there are ramifications if responsibilities are not met, on either side, it is essential to get a grasp on what you are signing up to.

A formal procedure to documentation is issued under the code, and there are penalties for major breaches, so it pays to read the key documents thoroughly, as well as seek legal advice.

CAN YOU IDENTIFY WHAT YOU NEED MOST FROM YOUR FRANCHISOR?

Every franchisee will have different strengths and weaknesses, and it is important to match your skills gap with support from the franchisor. Marketing, skills training and bookkeeping are just some of the commonly valued elements in a franchise.

ARE YOU READY TO SHARE YOUR BUSINESS DATA WITH THE FRANCHISOR AND NETWORK OF FELLOW FRANCHISEES?

Franchisees benefit from shared data, and franchisors who have strong reporting systems can help them improve their performance. But to do this effectively needs data, and that means franchisees must share their sales figures, costs of goods and so on.

WHAT STRENGTHS WILL YOU BRING TO THE NETWORK?

Do you know why a franchisor would find you a good choice for their network? Ask yourself which of your attributes would be of value to a franchisor. What would identify you as a good prospect? Again, match your strengths to the right brand to make the most of your business.

ARE YOU PREPARED TO PAY ONGOING FRANCHISEE FEES?

It is a rare franchise that does not extract fees from its franchisees. First up, an initial payment will be required, then there will be monthly fees and levies, including a contribution to a marketing fund.

If you do not see the value in paying for the benefits of a franchise, then don’t follow this path. It is not for everyone.

WHY DO YOU WANT TO BUY A FRANCHISE?

Why do you consider franchising a good option? Be clear about the benefits of a f ranchise over alternative ways to boost your career, improve your finances or fulfil your ambitions.

Buying a f ranchise can seem like a shortcut to making money, but there are no guarantees. Even with hard work, a great location and a respected brand, failure is a possibility.

You need to know exactly why a franchise is for you.

WHAT YOU NEED TO ASK ABOUT THE BUSINESS: DO YOU KNOW WHO OWNS THE

BUSINESS?

In a smaller business it is likely the franchisor is also the founder, or at least a managing director in a family-owned business. In more corporate set-ups there is likely to be a board and shareholders. It is good to know who is pulling the strings behind the scenes.

HOW DOES THE BUSINESS SOURCE ITS INCOME?

A crucial question: how will you earn revenue from this business? Is it a long-term prospect? Consider the external threats that could affect turnover.

IS THERE A HEALTHY CASHFLOW?

A good revenue earner may not equate to a business with a solid cashflow. You need funds to run your business, pay wages and

Having the backing of your loved ones and sharing the vision and goals will reduce the likelihood of family disputes in tough times

keep growing, so check the outgoings are not excessive.

CAN THE BUSINESS DELIVER A PROFIT?

When franchisors or franchisees indicate typical turnover, it is important to remember that is not the same as profit. Working to a return on your investment is all about achieving profits, and you need to be confident there is a suitable profit margin in the business.

IS THE FRANCHISOR COMPLIANT WITH REGULATIONS?

You need to follow the rules, but so does the franchisor. Franchising Code commitments need to be followed, and franchisors also need to comply with industry-specific regulations.

IS DOCUMENTATION UP TO DATE AND ACCURATE?

Be wary of any franchisor who is not on top of their documentation and legal commitments. A franchise lawyer will be able to point out any anomalies.

HOW PROFESSIONAL IS THE FRANCHISOR TEAM?

The culture and ethos of a franchise network is far from standard. Your expectations of a mobile lawn-mowing business will be different from your expectations of a tutoring business or a fast-food chain. Certain levels of professionalism should be apparent, though – the timeliness and manner of communications, the presentation of franchisor staff members, the material available to you as a prospective franchisee, a readiness to share information and not pressure you into a decision.

HOW MUCH TRAINING IS PROVIDED, BOTH BEFORE START-UP AND ONGOING?

As many franchisees enter entirely new arenas when they buy a business, the upfront training is absolutely crucial. It is worth asking franchisees in the network if the training offered is fulfilled, and valuable.

WILL THE FRANCHISOR PROVIDE THE SUPPORT YOU NEED?

You have already identified your strengths so you will need to ensure your weaknesses are covered, either by training or tools available in the network.

HOW HAPPY ARE FRANCHISEES IN THE NETWORK?

Levels of satisfaction are a good gauge of the franchise. Happy franchisees tend to be more profitable, are likely to renew their agreements and will work to help others ‒ all good signs of a franchise you’ll want to be a part of.