Along the Way
With over twenty years in franchising, friends and acquaintances often ask questions about franchises. Sometimes they are generally curious about how it works, often they are motivated by an interest in learning more about owning one. I have divided the top questions asked, and some that should be asked, into five segments in creating this blog. This is the fourth segment of the group.
Part 4 of 5: Along the Way
Questions to Ask Before You Buy
Not all franchises are created equal. While it is sometimes hard to spot trouble zones, here are some basic questions to ask:
- How long has the franchisor been operating and how many franchises are operational?
- Has the franchise received any accolades from the industry?
- Have the leaders of the franchise been involved in other franchise systems that have failed?
- How many lawsuits are pending (look for a pattern here)?
- Does the franchise or leaders have any prior bankruptcies?
- Do they have an FDD and are they willing to provide you one?
This is a large investment, so taking your time to make the right decision is crucial. If a franchisor is rushing you, advising that you do not need an attorney, or even threatening that time is “running out,” you may want to reconsider doing business with this franchisor. If you do use an attorney, make sure that you use an experienced franchise attorney. Family lawyers will not have the expertise necessary to help. And realize that franchisors rarely change their franchise agreement. Other facts that you should consider before purchasing a particular franchise:
- A franchise that has less than two years in business;
- A franchisor that supplies vague answers (red flags: “as needed”, “our discretion”, or any ambiguous answer);
- A franchisor that holds no registered trademarks to its operating system
- A franchisor that is anxious to finance your endeavors rather than helping you run a prosperous business
Our fifth and final segment will focus on getting the doors open to your new franchise busieness.
About the Blog Author
With over 25 years of franchise experience, Tiffany Dodson, CFE holds deep roots from senior marketing roles at well-known international franchises to recognition as a top performing franchisee, Master Developer, author, and speaker. Find Tiffany at The Salt Suite and reach her via Tiffany@TheSaltSuite.com.Back