The franchise meeting is a strange meeting in some respects. Many potential franchisees make the mistake of believing that the franchisor is only after their money and that they are interviewing the franchisor. In reality the franchisor is equally concerned to ensure that they get the right person that will become an important part of the team and someone that they can work with on a long term basis.
 The franchisor has to be satisfied that the potential franchisee is capable of running a franchise and of representing his brand in the marketplace. He or she have to be satisfied that any prospective franchisee will follow the system and will be a good representative of the company. No franchisor will want to take on a franchisee if they are not absolutely satisfied that they will meet their criteria both in terms of skill and aptitude and drive.
Equally, you have to be absolutely satisfied that the opportunity is right for you. That process starts with self assessment. Some of the areas that you carefully need to examine are as follows:
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Do I understand franchising? |
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Am I prepared to follow the franchise system even when the going gets tough. Research has shown that a high proportion of franchise failures are caused by the franchisee just not following the system? |
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Do I have the financial resources to allow the business to grow? |
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Am I prepared for long hours and sometimes unsocial hours? |
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Are my family prepared for my self employment and how will it affect them? |
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Do my family support the business venture and can they help? |
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What transferable skills do I have? |
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What aspects of your current or previous jobs give you most job satisfaction and why? |
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Am I single minded enough to keep going? |
There are many questions that you could ask and we have seen lists amounting to over 1000 questions that are recommended. In reality you need to break your questions down into sections and ensure that you get answers to the questions that are important to you..
The Franchisee role
What is exactly the role of the franchisee on a day to day basis?
What skills are needed and do you possess them?
If you do not have the skills are they covered as part of the training programme.
Is the role one that you feel confident that you can be successful in ?
Do you see yourself being happy in this role.
Support and training
 What level of support can you expert from the franchisor?
What areas does the training programme cover and how well does it address skill areas that you may be concerned about.
What happens about staff training ?
What support is available to help you on the launch of your business?
Perhaps equally important on a personal level do you feel comfortable with the franchisor and his team. Remember you will be working closely together and you need to feel that you can work with them and that there is support available when you have problems.
Financial considerations
How much of your capital will you need to invest in the business, both when you start and in cash flow terms during the first years?
Are you prepared to borrow the shortfall ?
Do you have a reasonable credit history if you need to borrow ?
Establish exactly what you get for your money especially if equipment is included?
If training is residential or at head office do you have to pay separately for accommodation etc ? Is a deposit required?
If so are there any circumstances in which if you don't proceed you will lose your deposit or part of it ?
How much will you have to pay on an ongoing basis for management fees and marketing allowances ?
What do you get for your money ?
What level of income can you expect ?
When will money start to come in?
What level of gross profit can you expect to achieve?
Will the franchisor provide financial projections (recent legislation means that many franchisors are not prepared to give actual projections and will rely on a series of projections at various turnover levels)
Many franchisors especially BFA members have negotiated lending facilities from the banks, establish if these are in place?
Development of the Franchise
Find out about the history of the franchise, in particular when was it established ?
Was a pilot operation carried out and are there accounts available?
What is the business background of the Directors?
Do any of them have failed businesses or businesses that have been put into liquidation?
Has the business been adequately researched and market tested ?
You should also ensure that you have established the franchisors plans to develop the network. Normally growth should be at a rate that can be supported by the management team.
What is happening with ongoing product research and development of the brand?
How do the directors see the brand moving forward over the next 5 to 10 years?
Track record
You need to establish the track record of the franchise itself.
How many franchisees do they have, how many have failed or sold their business?
If they failed why did they fail ?
How many of the franchisees are profitable?
Ask for a list of existing franchisees and try to talk to a cross section of your choice. Many franchisors will only provide a list of franchisees once they have established that you are serious about taking a franchise. When you talk to them ask them whether the franchisor has met his commitments to them in terms of support
The Management Team experience
How experienced are the management team in both the business area and in franchising. Remember you need to feel comfortable and confident in their ability.
Establish who on a daily basis will be your go to point of contact. Is there a franchise manager in place ? Do you feel that you can work with them.
You should also seek the advice of a Solicitor and Accountant who will help you to make sense of the various replies to these questions. The Lawyer will also help you deal with the franchise contract. a list of recommended lawyers can be found in our professional help section. |
