8 Questions to Ask Before You Buy a Franchise

Before you invest your hard-earned funds in a franchise, you should ask the franchisor some detailed questions.  Here are the 8 areas to investigate:

1. Leadership. How does the management team guide and sustain the Franchise System, promote and ensure ethical behavior within the organization, communicate with staff and franchisees, and encourage higher performance?

2. Stakeholder and Market Focus. How will the franchisor gain market share and build positive relationships with staff, franchisees, and customers?  Is the company providing relevant products, services, and programs?  How does the franchisor help to ensure franchisee success and earn the loyalty (retention, referral, satisfaction) of franchisees and consumers?  What do the current and former franchisees say?

3. Measurement, Analysis, Knowledge Management.  Is the franchisor measuring, analyzing, and disseminating relevant data and managing information in support of key organization processes on a timely basis?  What about system improvement?

4. Workforce focus. Has the Franchisor implemented an effective HR plan (career progression, management succession, retention, rewards, compensation, compliance, safety, recordkeeping), defined operational procedures, and created education and training programs to build staff knowledge, skills, and capabilities?

5. Experience.  Look at the financial history, business background and experience of the franchise company and its staff.  Is it impressive?  What is their litigation history, involvement in bankruptcy or criminal activity?  The current Levels and trends in their franchisee performance and franchise system success must be evaluated!

6. Market. How do current market trends affect the franchised business and what is the level of local and national competition. What is the demand for the product or service offered by the franchisee? How reliable is the sources of supply and has the franchisor achieved any economies-of-scale? How is the national and local brand recognition of the franchisor and what about their expansion plans?

7. Franchise Parameters. Key franchise-related parameters must be examined, analyzed, and assessed (franchise relationship, intellectual property, territory, training and support, required purchases, management, strategic alliances, marketing, and community relations) to determine the quality, commitment, viability, and longevity of the organization.  Look at agreement specifics including costs (initial franchise fee, continuing royalty payment, advertising fees), controls (site approval, appearance standards, restrictions on goods and services offered for sale, operational restrictions, territory), termination and renewal, and other important issues that affect your purchase, operation, and exit.

8. Earnings Claims. Are Financial Performance Representations made, and, if so, do they make sense for operations in your market? Can you make money?

To receive more information about how to get answers to these questions, request our Free Report titled, “The Franchise Manifesto”. You can get your free copy here: