Questions to Evaluate when Franchising a Business

It is important to ask the right questions to better understand what it really means to be a franchisee in a particular franchise system, and if that franchise business is truly for you. For your convenience, Franchise Administration has provided a comprehensive list of questions to evaluate when franchising a business.

Basic Questions to ask the Franchisor include:

Where will your franchise be located? 
What is the success rate of existing franchises?  
Is there a franchise owners association? 
Is there a franchise advisory council?  
Who owns the trademarks, service marks, and are they federally registered?  
Are there any disputes pending or threatened against the trademark?     
Does this company compete with the franchisees in the marketplace?  
Will the franchisor finance any of the costs?  
Is the franchisor willing to negotiate the terms of the franchise?

More importantly, what is the total investment to own a franchise?  
What are the continued financial costs, the basis used for calculation, method of payment and frequency of payment?
Must the franchisee purchase products or services from the franchisor?

Questions on Products and Services include:

Are there any new products or services under consideration for addition to the franchise? 
When are they going to be introduced?
What is the estimated additional cost for adding the new products or services? 
Are there any restrictions on the distribution or sale of the product?  
Is there a guarantee or warranty program? 
How is it administered and what is the cost?  
Is there a minimum that must be purchased?

Questions on Operations include:

What are the roles and responsibilities of the field staff? 
How many locations does each franchise consultant work?  
What is the background of the franchise consultant I will be working with? 
Can I meet with the franchise consultant before purchasing the franchise?  
How often does the field staff visit a franchisee’s location?  
What is the additional cost of field services if the franchisee requires it? 
What kind of assistance is provided? 
What kind of supervision or quality control is there? 
What, if any, is the charge for assistance?  
What kind of business management systems are provided to boost sales and profits? 

Questions about Advertising and Marketing:

What type of consumer advertising does the company recommend?  
What types of cooperative advertising programs are being used?  
What percentage of sales is recommended or required for advertising or marketing?  
How do the franchisees obtain their sales leads or customers? 
What is the franchisor’s national/regional advertising program and budget? 
What portion of the national/regional advertising contribution is used for administrative/agency/ corporate expenses and fees?  
What are the primary advertising or marketing vehicles? 
What is the grand opening advertising program and cost?   

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