Get All Access for $5/mo

Five Questions to Ask Franchisees Before You Become One When researching a franchise purchase, don't overlook your best source of information: current and former franchisees.

By Jeff Elgin

Opinions expressed by Entrepreneur contributors are their own.

There's no substitute for homework.

That's where the real learning happens for students, and the same is true when investigating a franchise. The most important homework step is calling people, specifically the franchisees of the system you're interested in. You'll receive a list of all the existing franchisees in the Franchise Disclosure Document you get from the company, so take the time to call at least five to 10 of them. It also a good idea to do a search online to find some former franchisees.

Here are the best questions to ask them:

1. How well did your first unit opening go?
This broad question focuses on how effectively the franchisor's systems and training work. An honest answer will reveal how easy the franchisor can help make the process of opening and operating that first unit. There will always be snarls when opening any new business but this question will tell you if they were small annoyances or ulcer-inducing.

2. How well do the marketing programs work?
Most franchises have required marketing initiatives designed to help build the business by seeking to attract a lot of customers. Few subjects arouse more emotion or controversy among franchisees than whether their required marketing programs work.

3. How well does everybody get along?
Many franchisors describe their s as being just like family. That may be true but find out whether it's like Beaver Cleaver's or Archie Bunker's. If you don't want to live a life of conflict with someone calling you "meathead" every day, then the answer to this question is important. Make sure you have a good feeling about the support and teamwork of the organization and that it matches your values.

4. How much money can I make?
This question is the most important one for many prospective franchisees. You'll want to determine the average startup investment, the average unit sales, the main expense categories, gross and net margins for the business, and how long it takes a new unit to break even and start making money for the owner.

It is usually best to save the money questions for last. Most people are reluctant to discuss their personal finances with someone they don't know. You'll find that franchisees are more willing to cover this subject once you've established some rapport with them.

5. If you had it to do all over again, would you still buy this franchise?
No matter what the answer is, explore it. Your response should always be "Why?" The most common answer is a pause followed by a yes. This usually means that there are valid arguments for answering yes or no, but pride of ownership usually tips the balance toward the positive answer. Ask for the strongest argument they can think of for answering yes or no. The contrast can be very informative, especially if you can read between the lines.

Another benefit of these calls is that you will likely find your interest in the franchise quickly increasing or waning after a handful. Waning interest is a red flag telling you that this probably isn't the right business for you. If you find your interest rapidly increasing, it is a very positive sign.

Even if you can't really put your finger on why either of these reactions is happening, trust your gut. Your instincts have a way of making you feel right or wrong about a decision like this and they are usually correct.

Jeff Elgin has almost 20 years of experience franchising, both as a franchisee and a senior franchise company executive. He's currently the CEO of FranChoice Inc., a company that provides free consulting to consumers looking for a franchise that best meets their needs.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Side Hustle

She Grew Her Side Hustle Sales From $0 to Over $6 Million in Just 6 Months — and an 'Old-School' Mindset Helped Her Do It

Cynthia Sakai, designer and founder of the luxury personal care company evolvetogether, felt compelled to help people during the pandemic.

Business News

Costco's CEO Says This Product Is the 'Most Important Item We Sell'

Ron Vachris stepped into the CEO role at Costco after more than 40 years at the company. He began as a forklift driver.

Growing a Business

Take This Radical Approach to Customer Retention to Boost Employee Morale — And Your Profit

Customer retention has never been more important to an organization's bottom line, but achieving it means doubling down on the connection between employees and customers. Here's why it works, and how to get there.

Business News

This Airline Is Now Ranked Best in the World, According to a New Report

Skytrax released its ranking of the world's best airlines for 2024.

Business Ideas

Free Webinar | July 18: How to Design, Manufacture and Sell Your Product Idea

Join us for our webinar with Jordan Nathan, founder of the kitchenware brand Caraway. Jordan will share the strategies he used to develop, manufacture and sell his products that grew Caraway's annual revenue by over 500% in just 4 years. Register now!

Business News

A Microsoft-Partnered AI Startup Is Being Sued By the Biggest Record Labels in the World

The company is allegedly profiting from AI without compensating the human work that fed the technology, the lawsuit says.