Buying a Franchise? 4 Essential Questions You Need To Ask Your Franchise Representative

May 20, 2016

4 good questions to ask franchise sales reps

Each and every day, hundreds of people are looking at franchise opportunities. They’re looking to make a change in their lives. Maybe they’ve been downsized from their corporate jobs and don’t want it to happen again-a few years down the road. Maybe they’re currently working, but absolutely hate what they do. Whatever the reason, they’re pursuing business ownership. But…

Most Of Them Won’t Be Able To Pull The Trigger. And I know why.

The Right Questions Need To Be Asked

If you’re someone who’s looking to buy a franchise, you may not know what questions to ask. That reason in itself stops a lot of people from moving forward with their dreams to be their own boss. Starting a business is scary enough. It’s super-easy to talk yourself out of doing it-especially when you don’t have a lot of information to go on, or when you hear stuff.

When it comes to questions, there are questions to ask of the franchisees that are already in the system, and there are questions that must be asked of the franchise development reps…the franchise company salespeople. Today’s article is going to focus on 4 important questions that need to be asked of the franchise reps. Please write them down so you can use them right away or maybe at a later date. Of course, you can just bookmark this article.

4 Essential Questions You Need To Ask Your Franchise Representative

The questions that follow are designed to get you over the hump. The answers you get may help you feel better about what you may be about to do. Don’t be shy! Ask your franchise representative these 4 essential questions.

1. When is the best time to open my business?

This is an important question to ask, especially if peak times for revenue are season specific.

For example, if you’re interested in buying a lawn-care franchise, opening your new franchise business in the middle of the summer may not work out well for you. Then again, maybe it would. There’s only one* way to find out; ask your rep!

*There is another way to find out when the best time (or the worst time) is to open your business. All you have to do is ask a few existing franchisees when they opened their businesses. You can also ask them when peak times for revenue are.

If it turns out that your timing isn’t very good with regard to when your franchise would open if you signed the franchise agreement now, try to get creative with the franchisor. Maybe you could put a deposit down and sign everything a couple of months from now instead. That’s only one idea. The franchise rep may have others.

2. What is your capacity to provide the necessary support needed by franchisees?

Part of what you’re paying for is support. Technical support. Product support. Sales support. Ask your rep for specific examples of a few of the support items the franchisor has helped their franchisees with. It’s easy to say, “We offer excellent support.” (It’s part of every franchise representatives’ sales repertoire.) It’s much harder to demonstrate. Again, get specifics. Don’t settle for generic examples.

3. What help will I receive in local advertising and promotion?

Hopefully, one of the reasons you’re thinking about going with a franchise business is because they already have a marketing system in place. Again, you’re paying* for it, so find out as much as you can about past promotions and how well they worked.

*It’s not unusual for a franchisee to be required to pay into a national marketing fund. Specific costs will be spelled out in the actual franchise contract, but figure you’ll be paying anywhere from 1%-3% of your gross sales into the fund. So, if your franchise business is doing $ 400,000 in annual sales, and you’re required to pay 2% of your sales into the fund, you’ll be writing checks totaling $ 8,000 to the franchisor, annually. That’s a lot of money; as far as I’m concerned, the franchisors’ marketing plan really needs to be stellar.

Ask your rep if the franchisees are generally happy with their ROI from the money they’re required to put into the fund. Then ask the franchisees themselves. Believe me, if the marketing sucks, you’ll get an earful.

4. What exclusive territory rights will I have?

I can’t stand franchisors that offer open territories. It’s a major pet-peeve of mine. Let me tell you why.

Years ago, when I was a franchise consultant (broker), one of the people I helped get into business called me about 9 months after he opened. He told me about a very aggressive franchisee located in the territory right next to his that was actively marketing in my guy’s area. This franchisee was going after potential clients that my guy had already called on. I was very angry-almost as angry as my guy, so I called franchise headquarters. I asked if his territory was an exclusive one. I was told that his territory was “protected,” which meant that no other franchises could be sold in his territory. Really? I was mad. My bad, I guess. I thought “protected” meant well-protected. I wasn’t satisfied by the answer I received, so I left a message for the CEO. I never got a call back. ()This was before I started my franchise blog. If it had been after, I would have composed one heck of a post about the situation. I don’t think the guy I helped is in business anymore. I’m kind of scared to check.

The bottom line: Ask how your territory will be defined, and what types of protection you get. And, then invest a little money with a franchise attorney. It’s well worth the cost…the investment.

It’s Essential To Ask Good Questions

It’s exciting to look at all the different franchise opportunities available. There are a lot of great choices. There are lots of opportunities to become your own boss.

But, it’s essential to do good research…to gather facts. Ask your franchise representative good questions. Make a list of them. Don’t worry if you feel that your questions are too tough. Just ask them nicely. After all, it’s your money that’s on the line.

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