If you are a newbie to anything, it is always a wise and prudent decision to seek advice from experts. These are the people who are in authority in a particular field or subject. In the world of business, there are a lot of specialists whose opinions may differ because of different reasons. But, if you plan to drop the ball and choose to become an entrepreneur, you should know what you want, and you should be in control of every decision that is made along the way.
In other words, as a new capitalist, it is required that you have a mind of your own, follow your instinct and be a good judge especially in making decisions. This is especially important if you want to engage in franchising and become a franchisee in particular.
By definition, a franchisee is either a person or a company that is authorized or granted a license to do business under the franchisor’s trademark, trade name and business model by the franchisor. Thus, if you have enough funds to buy a franchise, this is supposed to be the assured way to generate high returns on your investment.
However, if you inappropriately take the first step, all may not work this way. That is why identifying a good consultant and asking the right questions are the crucial initial steps to take. Having asked spot-on questions is the key in guiding you to make the right decision.
Below are detailed questions or concerns that will surely help you decide if it is worth your time and effort to make a leap in getting that franchise. Read on and do not forget to take your notes as well.
1. How many years is the company in existence?
This is probably the first most important question to ask. It just makes sense that if the company is long enough in the market, then perhaps it stood the test of time in the world of competition.
If it is the other way around, then you may think twice about pursuing it. Moreover, it is also notable to check if the business is originally set up to engage in franchising.
This will bring more confidence to you as an investor.
2. What is the company’s current financial standing?
It is best to check the business’ financial condition most especially in the last three (3) to five (5) years to give an overview of the overall status of the company.
3. Can the company show its financial statements, bank accounts, and existing franchisees income or business operations to interested individuals or companies?
If the company is open to this inquiry, then there is no doubt that the company is confident enough to expand the business. You will know if the company is liquid or solvent. This piece of information can greatly help you make your franchising decision.
4. What is the company’s Vision and Mission?
These two are significant information that might interest individuals as this relates to one’s dreams and aspirations as a businessman and even as a person.
If the vision and mission of the company are aligned with one’s values and principles, then it will just be an easy transition to embrace and integrate.
5. What are the qualifications required to become a franchisee?
This is the basic question for this will assess the credentials, background and most of all financial capabilities of the interested franchisee. Like any other applicants, the requirements should be fulfilled for you to be considered and accepted.
6. In terms of location, pricing, and choice of suppliers, are there operational restrictions?
These are the specific details that business owners are very particular since these things concern income and expense.
These are the two chief ingredients that will determine business success. If this information is clearly laid down to the interested franchisee, then it is a safe way to consider.
7. What are the rights and obligations extended to you as a franchisee?
This is in relation to item #6 identified above. Aside from the operational details, there is also need to determine the extent of the rights given to the franchisee. In this way, the line of obligation is clearly defined, and the business will flow smoothly along the way if it is pursued.
8. What about termination clause?
This is also an important question as the future is always unknown and undetermined. This is just an assurance that will give a sense of security to the franchisee if there is a need terminate the business in the future.
9. What is the reputation of the franchisor in terms of honesty, credibility and being supportive to its franchisee?
Try to gather information as much as you can in terms of facts and even anecdotes that describe experiences related to these three big words: honesty, credibility and show of support which are all geared towards the franchisor-franchisee relationship. This will cast away doubts in terms of confidence towards the franchise you want to buy.
10. Is the franchise a member of any franchising group?
This is just one way to check if the franchise works well with competition and regulation. Franchising group regularly updates and keep its members posted on new concepts, techniques, and other best practices to make business more efficient and effective.
The ten (10) questions above are just guidelines to ignite your interest in the company you would like to franchise. Nevertheless, the best way is still to make your research as to why they make a great investment. The more good or bad information you get from the company, the better it is. These are still valuable facts that will help you decide in making the franchise or not.
In the end, there will be no one to blame if something went wrong along the way. Contrary to this, this saying still matters “Go with your guts, they are always correct most of the time.” And in business, this always matter interestingly.