Buying a franchise is a big decision, not dissimilar to entering into a marriage or any long-term relationship. Unlike most marriages, there will be a contract to sign (your franchise agreement) and, like any marriage; you hope it will be for the long-term.
So, you are in the ‘courtship’ phase of the relationship – what are the all-important questions you need to be asking your future business partner to make sure you make the decision that’s right for you, and them.
An ethical franchisor will want to be open and honest with you but it’s incumbent on would-be franchisees to ask the right questions to make sure that the franchise they are considering is right for them and their circumstances.
Here are 7 questions to ask that will help you to make the right decision:
What sort of franchise are you looking for?
Are you looking for a business to invest in, one where you can put a manager in to run the day to day operation so that you are relatively hands-off, or do you want to be an owner-operator where you are hands-on in the business?
Also think about the working environment – do you aspire to an office-based roll, one in a retail setting or do you want to be out on the road?
Franchises come in many shapes and sizes and there is something for everyone!
Is the model proven?
The main attraction of a franchise business is that the model is proven to deliver a successful business for individual franchisees.
This will be a relatively easy question for established franchise businesses but could be a harder one for a new franchise setup.
Ask if the franchisor has adapted the model over the years. What made them need to change it and how has that gone?
And a really important one is understanding how the opportunity will fare during a recession – is the business susceptible to an economic downturn?
Given the recent pandemic, it’s also worth asking how things went during lockdown.
What is the average revenue across the network?
Everyone’s financial circumstances are different but you need to put your financial goals at the forefront so that you come away from your discussions with a clear picture of what the earning potential is in the business.
Franchisors will be able to share figures from across the network to enable you to make an informed decision about potential earnings.
Most new businesses take months to turn a profit but don’t let that be a barrier as you should be able to build a salary into your financial projections so that it is covered by a loan from the bank if you are going down that route.
Don’t forget that banks are really amenable to providing funding for proven franchise businesses.
What launch support is in place?
As we’ve discussed already, the key to success is in the model – but what support will you get learning the model and getting to grips with all the systems?
What help will you get pre-launch? Is extra support in place during the early months? And is support ongoing once you are up and running, and at what level?
Marketing is key, so make sure you understand what marketing support is going to be made available to you.
Does the sector have growth potential?
It’s really important that you understand the future potential of the market you are entering into.
Probe the franchisor for information and data on the financial strength of the sector and its longevity including how any market trends will impact it.
For example, with PACK & SEND we are able to talk about the growth in our own network sales and the size and growth of the global logistics market.
What skills and knowledge are required?
It’s really important that you understand what skills and knowledge are required to make the franchise you are looking at a success.
With PACK & SEND we are essentially a retail business so we look for great people skills and a passion for customer service.
Problem-solving, lateral thinking, organisational, time management, communication, numeracy, and computer skills are also necessary. So the skills required are not things like packing ability – we can teach you that!
Finally – do you like them?
This is a question to ask yourself, rather than put to the franchisor. But it’s critical. The people you speak to during the discovery phase are likely to be good representatives of the brand and are likely to reflect the brand’s values and ways of working.
If you like them and how they have dealt with you during the discovery process, that’s a great start.
This article comes courtesy of PACK & SEND, owner-operator franchise opportunity in the rapidly growing global logistics sector.