Questions and answers about the franchise opportunity

Using the Franchise Disclosure Document (FDD) as my guide, I would ask very specific questions. I would follow the FDD point by point and ask questions related to each section. It is an unmissable roadmap.

Are you exploring a franchise opportunity outside of the United States? Since most franchisors are based in the United States or, at a minimum, offer franchises within the United States, they will already have developed a Franchise Disclosure Document to provide to franchise candidates before the franchisor can accept franchise candidate’s money. . Although they are not required to do so, I would request a copy of the FDD on any franchise concept you may be exploring. You can do this directly from the franchisor or from the various state agencies within the United States, most of which can be accessed online.

Get to understand the history of the concept. The passion of the founder. The experience of the executive and support teams. Have they really worked in a place? Have they had a business before? It’s kind of hard to provide guidance if they haven’t!

Have them validate the expenses involved and get a full understanding of the range of expenses and why. Ask questions about attendance from finding a location to the grand opening. Ask about the temperament of the franchise group as a whole and within your market. Of course, I also recommend talking to franchisees. Be sure to ask them direct questions about costs, problems, profits, trends, etc. Ask the franchisor and franchisees about the competition. Ask about the business, the revenue trends of the system as a whole.

Ask questions about the operations manual. Ask questions about cooperative advertising and associated fees. Focus on years two and three, which are often turning points in your business and your relationship with the franchisor. Ask questions about normal and routine support and support if you are having problems, crises!

Ask about exit strategies. Either because you want to go out or because you have to go out. Ask about transfer fees and the process of selling your business. Understand the franchisor approval process.

Ask questions about the franchisor’s litigation. Know the whys and hows. Ask why each franchisee mentioned as having failed actually failed.

More than anything, after completing this process, trust your gut! Take your time and think this through until you are 100% sure of your decision. Make sure you have all of your support mechanisms, including friends and family. Do not fool yourself. Do not lie to yourself. And, do not justify any negative aspect.