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Questions Franchise Candidates Should Ask the Franchisor

Having a phone conversation with our store operations manager is a good opportunity to get answers to more of your questions regarding store operations and what a day in your life as an owner would be like.

If you have been invited to make this appointment to have this conversation, use this link to schedule a time to talk: CLICK HERE.

Use the guide below to help you prepare for that conversation.

10 Questions Franchise Candidates should ask the Franchisor

Since the franchise evaluation process can be critical to a franchise owner's future success, it is important to gain as much information as possible. The answers to the following questions can provide a profile of the franchisor and what areas they view as important. For example, questions about the proposed franchisee territory can say a great deal about how a franchisor views this critical component of the franchise program.

  1. If the franchisor doesn’t disclose any franchisee financial information, ask why they don’t disclose franchisee financial results in Item 19. The franchisor can provide cost and expense data even without a financial disclosure. (Click IT, by the way, fully discloses financial information.)
  2. If the franchisee does what they are advised to do when operating their franchise but finds themselves having financial problems, can they expect some assistance from the franchisor? Has this franchisor assisted any franchisees, and if so, how? If not, how willing are they, and what would they do?
  3. Have any franchise agreements listed in the FDD been terminated? If so, who are they, and why?
  4. What are the key 3-5 requirements for operating a successful franchise? Are there certain traits your most successful franchisees share?
  5.  Did you conduct a market study for the proposed franchise territory? If not, why? Although there may not yet have been a detailed competitive review, does the franchisor know the major competitors the franchisee will encounter in the proposed territory? Is the franchisor familiar with the strengths and weaknesses of these companies? How do they configure and establish a franchise territory?
  6. How is the advertising fund administered? Are any of the franchisees involved? If not, why not? If yes, who are they? Does the franchisor provide a report on how the funds are used?
  7. What is the franchisor's strategy for developing the franchise network? Do you try to place franchises in specific markets to build brand recognition? What about the state or market area being considered? What are the plans regarding these locations?
  8. What kind of assistance does the franchisor provide for site selection? Is there any construction support? If yes, does this cost additional money?
  9. How are disputes or issues between the franchisor and franchisees resolved? Is there a dispute resolution process?
  10. What support or assistance is provided to franchisees before or during their new opening?

When a franchisor grants a franchise to a new franchisee, it is entrusting the franchise brand name and reputation with the expectation that the new franchisee will be successful and contribute to the franchise network. From the franchisee’s standpoint, they are investing their money and time into a new franchise and risking their capital and future to build what they hope will be a successful franchise. Sometimes, either party may choose to move the franchising process quickly. It’s important that this doesn’t happen, but rather, both parties obtain as much information about each other as possible, including asking the right questions.

Questions Franchisors Should Ask Candidates

10 Questions We, the Franchisor, May Ask You. (Be Prepared to Answer these Questions)

The franchisor should ask as many open-ended questions as possible. These questions can reveal and provide insight into how prepared and capable the franchise candidate is. It can also indicate how well the person responds to an important subject or question the candidate hasn’t considered.

  1. If you need to invest more capital in the franchise, how much could you invest, and where would it come from?
  2. Will anyone assist you in operating the franchise? What are their qualifications?
  3. What skills do you have that you believe will make you a successful franchisee? Do you, your partner, or your spouse have experience working in or operating a business comparable to this franchise?
  4. If an unforeseen event occurred that prevented you from operating the franchise, who would you depend on to replace you?
  5. What are the major concerns you might have about being successful? Have you considered anything that could go wrong?
  6. Have you done a business plan, income statement proforma, and cash flow projection? Are you utilizing the services of an accountant? What do you project your sales will be in six months after opening? After one year?
  7. What other franchises have you considered? Why have you chosen our franchise?
  8. Do you have any suggestions or ideas for promoting your franchise once it’s open? Do you have any contacts or networking you can use to help generate business?
  9. How many franchisees do you plan on contacting to obtain feedback? Have you already spoken to any other franchisees? If yes, do you have any comments regarding what they said?
  10. Do you have a long-term operational strategy for the franchise? Would you be interested in eventually acquiring additional franchises?