Franchise - Buying a Franchise? Top 25 Questions to Ask a Franchisor
Overall questions for Franchisor ✅
Financial related questions ✅
Marketing and Demographics ✅
Operations and Training ✅
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Overall questions for the Franchisor
- What are your criteria for choosing a Franchisee?
- What is your competitive advantage in your industry, who are your biggest competitors and what makes this franchise stand out?
- How Financially strong is the Franchise company? (Item 21 in FDD) Are you owned by a larger parent company? How do you get capital for the Franchise if it’s needed?
- What’s the biggest competitive threat in this industry/marketplace? What is the biggest opportunity?
- What are the most recent changes and innovations you implemented, and what is on the horizon?
- How many locations/units have closed/opened in the last 3 years? Why did the closed units/locations close? (Found in FDD)
- What’s happened to the market/industry in the last 5 years? How has this impacted your market share and strategy?
- What key performance indicators (KPI’s) do you share with Franchisees?
- What kind of periodic calls or conferences do you host for the Franchisees?
- Where do you see the company 5 years from now? Are you planning any major strategic changes to this concept?
- How long have your top 10% of your AUV performing units/locations been opened/operating?v
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Financial related questions
- What will impact the total range of the investment, and how can I keep the total investment lower without sacrificing on opportunity and quality?
- What do you disclose in Item 19, and why?
- What are the royalties, how do you calculate them and how often are royalties paid? (Are royalties on gross sales or net sales)
Marketing and Demographics
- What are the marketing fees required, and how often are they paid?
- How are the marketing fees used, and how does it support Franchisees?
- How do you support Franchisees with local marketing, how many people are on your marketing team?
- Has the franchisor conducted any market studies on the territory to ensure that it can support a franchise?
- What are the demographics required to support a franchise?
- What are the traffic counts required to support a franchise?
Operations and Training
- How does the initial training work?
- What support do you offer beyond the initial training?
- How does your supply chain work? Who are the vendors/distributors in my area and how many other locations/units do they support?
- What vendors am I required to use and for what can I select my own vendors?
- Do you earn more on products purchased by Franchisees? If so, what and how much?
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