Getting Started: 16 Questions to Ask a Franchisor
If you’re looking for a new franchise opportunity, you’ll have a lot of questions to ask to find the right brand for your needs and goals. This is especially true in the men’s grooming industry since there can be huge differences between the overall styles of different brands in this industry. Before you get too far into your hunt for the perfect brand, it’s important to know what questions you should be asking to help you single out the best possible franchise opportunities. Our team at The Gent Place recommends that all prospective franchisees ask several questions when they are interviewing a franchisor to decide if the brand is the right fit. Here are 16 questions you should ask before making a commitment.
1. What is the Background of This Franchise and the Executive Team?
It’s important to know the history of a brand and the team in charge of the brand’s direction. Ask who founded the business, and what their motivation was to begin. This can help you identify whether you agree with the fundamentals of the business, as well as discover the franchisor’s experience. At The Gents Place, we have an About Us page on our website, devoted to answering this question.
2. What are the Criteria for Choosing Franchisees?
Many franchises have a list of traits and qualifications they feel fit best with the brand. This can include personal traits, such as being detail-oriented and a good communicator, but it also can include previous employment positions or certifications.
3. How Much Will I Invest Before I Open for Business?
Starting a new business can be a considerable investment, but it’s important to know the numbers. Some franchises can be started for a few thousand dollars, while some require an investment of more than one million dollars. Your startup costs should be listed in Items 5 and 7 of the Franchise Disclosure Document (FDD), but be sure to have these items explained in more detail by the franchisor. They can also help you discover potential costs that may not be listed, such as localized fees or permits.
4. How Much Will I Need to Pay in Ongoing Fees or Royalties?
As a franchisee, you most likely will need to continuously pay for your licensing rights to use the franchise brand. This may come as a percentage of your earnings or a flat rate. You may have other ongoing fees, such as advertising fees, as well. These fees can be surprising and can damage the financial health of your business if you’re not properly prepared for them.
5. How Much Capital Do I Need to Support My Franchise Until I Can Break Even?
Businesses take money to run, and a new business may require some extra support while it’s getting started. Find out if the franchisor recommends having a certain amount of capital set aside to help cover business expenses until your business begins to break even. You can also find out how long the franchisor expects your business to be open before you begin to see a return on your investment.
6. How Financially Strong is the Franchise?
The most recent financial statement of a franchisor should be included under Item 21 of the FDD, and it can give you a clearer picture of the franchise’s finances. You can also ask the franchisor about how they show the steady growth of the company, and what plans are in place for future growth. You may also want to learn more about the amount of income that comes from franchise fees and royalties, and the amount the franchise designates to invest into the system.
7. What is My Expected Profit?
Obviously, the franchisor cannot predict your unique unit’s financial future, but they should be able to provide some solid insight to help you understand what your expected profit, costs, and gross sales will be.
8. How Many Locations Are in Operation?
The number of locations in operation can be indicative of many things. If the franchisor doesn’t provide ample support for the number of franchises in operation, it may be an issue. Smaller franchises may lack the resources to support a huge number of franchise locations, while a larger franchise may have the resources, but will not be able to provide dedicated support to their franchisees. Ask the franchisor about the success rate of their franchisees, and some of the common reasons for unit failures.
9. What Makes This Franchise Different Than Your Competitors?
Some markets are fully saturated, so what does this brand do to stay competitive? Request information about any unique selling points or other advantages they have over the competition.
10. What Support Can I Count On?
Once the initial training is complete, will you be able to get additional support? Is there support staff available on a day-to-day basis, ongoing training opportunities, on-site assistance, or other ways that the franchisor will support you? Having additional support can be a huge factor when it comes to the success of your business.
11. What Do You Expect of Franchisees?
Just as you have expectations of what the franchisor will and will not do, so do they have expectations for you. There are most likely expectations which will be placed on you regarding payments, daily business operations, and other obligations, which should all be laid out in the franchise agreement. Discussing your obligations ahead of time can help you understand what will be required of you.
12. How Are Disputes Resolved?
Arguments and disputes are a natural occurrence in businesses, so it’s in your best interest to know what the steps are for handling an issue before you find yourself facing one. Item 3 of the FDD will list all legal actions the franchisor has been involved in, which can be a good indication of if they hold up their end of the franchise agreement. Don’t forget to ask about how your contract can be terminated.
13. What Will My Territory Be and How Will I Be Protected?
As a franchisee, your territory is your market. It’s important to protect your market and ensure that you understand what competition you may be facing—especially if you don’t have an exclusive territory. Ask questions about how the franchisor manages territories and competing units.
14. What Input Do I Have in Marketing or Advertising?
Many franchises require franchisees to have an advertising fund as a part of their agreement. The fund may be local, but it also may be regional, state-wide, or national. You should ask how much you will contribute, as well as whether you’ll have any input into how the money is spent. You also can request information about marketing opportunities in your local area.
15. What Will My Typical Day Look Like as a Franchisee?
Understanding the day-to-day operations of a typical unit for a franchise can be especially helpful in determining whether the franchise brand is a good fit for you. What are the operation goals of a franchisee? What challenges can you expect? These are important questions to help you determine if the franchise is a good match.
16. Can I Speak With Other Franchisees?
Franchisors are required to disclose contact information for past and present franchisees if asked. Talking with a franchisee can give you an in-depth look at the pros and cons of a franchise, as well as provide an experienced look at the issues you may not be familiar with. If a franchisor actively discourages you from contacting its franchisees, you may see it as a red flag.
Every franchise will have its unique quirks, benefits, and drawbacks. Finding the right mix of features in a franchise can be a challenge, but it’s important to do your due diligence when investigating franchise opportunities. Taking shortcuts may leave you facing a contract with a brand that simply doesn’t meet your needs—an expensive problem, indeed.
Want to learn more about our fine men’s grooming franchise brand and our franchise opportunities? At The Gents Place, we’re always seeking qualified franchisees to help us bring high-quality grooming services to gentlemen everywhere. Read more about our franchise process to get started.
Have questions? Contact our franchise development team today! Call (888) 463-2145.