30 Questions You Should Ask Before You Invest in a Franchise
There are more than 3,800 franchise systems and they are not all created equal.
I'm not talking about the fact that there are different concepts, services or products they offer. I'm speaking about the quality of the system and the support that they offer their franchisees. This is the most important reason to invest in a franchise in the first place. Franchise candidates buy into a system to take advantage of a proven model of success and unmatched support, so they don't have to take on all of the risks of building their own business.
However, just because a brand may have name recognition, a friendly corporate team and a product you're sure will be a hit, doesn't mean that it's the right franchise for you to buy. Beyond the considerations of how well your life goals and skills match up with a given franchise, candidates need to make sure that the franchisor meets a high standard in several key areas. Choose correctly, and your road to profitability becomes much clearer. Choose poorly, and you might have been better off launching a startup business.
If you're considering franchise business ownership, you better like what you see in these five areas.
1. Corporate support
A benchmark of franchising, the support that a given franchise system offers is arguably the most important benefit to consider. Franchise owners will be faced with hundreds of decisions every day when launching and operating their franchise unit, so knowing that quality help is just a phone call away is critical.
Here are some corporate support questions you should ask:
- If you need real estate, does the franchisor help select a location?
- What about lease negotiation and buildout?
- Do they offer help with financing?
- Do they have a buying program and what does it entail?
- Will I have access to someone only during business hours or is there support available whenever I need it?
- Is the operations manual easy to follow?
- How well-developed is the network of franchise owners that gain support from one another?
- What happens when you're ready to expand from one unit to multiple?
Technology has never been more important for the success of small-business ownership. In fact, according to a recent survey of 1,000 small-business owners, 75 percent are now using tech platforms for sales. Considering that the latest generation to enter adulthood has never known a world without the internet, ensuring that the franchise system you choose is tech-savvy has never been more important.
Here are some tech-related questions you should ask:
- How powerful is the company's website?
- How well does the website rank in its field?
- Does it offer ecommerce?
- Has the company developed apps for devices that allow owners to book appointments or purchase goods and services?
- How strong is their social media presence, not just on Facebook but on Twitter, Instagram, LinkedIn and YouTube?
- How up-to-date is their point of sale system?
- What about their intranet or business hub?
- Do they have a support team dedicated to tech?
Most franchise business owners will be responsible for their own local advertising, but they'll likely pay into a monthly marketing budget overseen by the corporate office. Understanding what that marketing budget covers is essential to make sure you aren't duplicating efforts and that the marketing budget is used to strengthen the brand and offer meaningful promotions.
Here are some marketing questions you should ask:
- How much care and attention is paid to the logo?
- Does the franchise contract with marketing firms to aid in brand development?
- Does the company offer stock photos or video to use for marketing?
- What about crafted print ads, radio scripts or television commercials?
- How often and how effective are the promotional efforts?
- Have they established relationships with any powerful philanthropies to support community initiatives?
- How strong is the company's social media marketing team?
- Does the franchisor have a national marketing plan?
4. Ongoing training
Most every franchise system is going to offer training when a franchise owner launches their business, but that should only be the beginning.
The business environment is constantly changing. Sectors evolve, as does the franchise system itself. Franchise owners should expect not only the training required to open their new business, but regular training to ensure they are operating their franchise unit at the highest conceivable level. Ongoing training could include regular, on-site visits from support experts, training support for management and other employees, as well as advanced training opportunities for franchise owners looking to expand.
Here are some training questions you can ask:
- When are new products or services released?
- Are there regular conference calls to keep franchise owners informed of what's happening with the franchise?
- How about annual conventions featuring breakout sessions covering best practices, annual reviews and introductions of new opportunities to help the business grow?
Certainly, a leadership team with lots of years working in the franchise is wonderful, but even emerging brands can feature quality leadership from executives who have meaningful experience within the franchise system's industry.
The leadership team should have years of experience between them, increasing the chances they have already been through situations that their franchise owners will face. Further, their experience should indicate growth in their roles. A 10-year marketing veteran who shows an aptitude for understanding how device apps and social media can grow your business is worth much more than a 20-year veteran who never got past banner ads on the internet.
Certainly, the experience of the CEO is important, but what about the rest of the C-Suite? Here are some questions you should ask about leadership:
- What does the chief operating officer bring to the table?
- Has the chief marketing officer worked on brands or campaigns you're familiar with?
- Is technology important enough in this system to feature a chief technology officer?
Franchise ownership is a journey that allows franchise owners to design the lifestyles they've always wanted while fostering financial stability and growing a legacy. Choosing a franchisor with high qualifications in the aforementioned areas will ensure their journey is smooth and successful.