Franchise 500

What to Ask Before You Buy a Franchise

Magazine Contributor
4 min read

This story appears in the January 2015 issue of Entrepreneur. Subscribe »

We pack a lot of data into the Franchise 500®, but there’s an additional crucial resource: franchisees. Sure, we take into account the number of units open from year to year, as well as closures, resales and even the number of lawsuits filed against a franchisor. But it’s easy to lose sight of the fact that behind all those numbers are real people—the franchisees who are on the ground facing everyday challenges to make their businesses succeed. And if you’re hoping to become one of them, they are your most valuable source of information.

By all means, consider the Franchise 500® as a first step in your research. It’s got a wealth of data to get you started on the path to finding a strong franchise system. But don’t get so caught up in statistics—whether they’re here or in a company’s Franchise Disclosure Document (FDD)—that you forget that your goal isn’t to become a number; it’s to become a success. Only you can define what that means. Other franchisees, the people who’ve been there, can help you figure out whether a particular system will help you achieve that goal. Call and visit as many of them as you can. 

Here are a few questions you can ask when you make those connections.

How much money can I make?

Knowing that this question is at the front of most prospective franchisees’ minds, more franchisors are choosing to make earnings claims in Item 19 of the FDD. But the picture presented is often incomplete, showing only average sales (not profits), sales for a select few franchises or sales for company-owned units instead of franchises. 

Fill in the gaps when you’re talking to franchisees. Ask them not only about their current sales and profits, but how consistent those numbers have been from year to year and how long it took them to turn a profit.

What’s it really like to be a franchisee for this company?

Company culture can’t be quantified, but it’s just as important as money when considering which franchise to buy. Get an idea of whether the franchise is a good fit for your personality and goals by asking franchisees if they’re satisfied with the system and what they would change if they could. Get their thoughts on the training and support offered. And find out how much input and flexibility they’ve had in how to run the business.

You’ll also want to find out what a franchisee’s day-to-day is like. Is their role more hands-on or behind the scenes? Do they have employees, or is it a one-man show? How much of their time and energy does the business really take? Get a picture of what it’s truly like to be a franchisee—and then do some soul-searching into whether it’s something you would be good at and enjoy.

What would you do differently?

Don’t miss the opportunity to learn from others’ mistakes. Even successful franchisees may have stumbled a few times starting up, and their experience and advice about what works—and what doesn’t—could prove invaluable. 

And don’t just talk to existing franchisees. In their FDDs, companies are required to include a list of franchisees who have left the system in the last year. Seek out the perspectives of former franchisees, and carefully consider whether any problems they encountered might have an impact on you, too. 

No matter who you talk to, don’t be afraid to hear the negatives. They will either strengthen your resolve that this is the right opportunity for you and teach you about pitfalls to avoid, or they’ll steer you away from a franchise system that’s not a good fit—and that’s the first step toward finding one that is.

More from Entrepreneur

Grow Your Business at Entrepreneur LIVE! Join us on Nov. 16 in Brooklyn, NY, to learn from legends like Danica Patrick and Maria Sharapova, pitch our editors, meet with investors, and potentially walk away with funding!
Register here

One-on-one online sessions with our experts can help you start a business, grow your business, build your brand, fundraise and more.
Book Your Session

In as little as seven months, the Entrepreneur Authors program will turn your ideas and expertise into a professionally presented book.
Apply Now

Latest on Entrepreneur

My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.