27 Tough Questions to Ask if You're Buying a Franchise Business

10 Tough Questions to Ask if You're Buying a Franc The Founder: He took someone else's idea and America ate it up.
  • Background

  • How did this business get started?

  • When did you sell your 1st franchise?

  • What are your future growth plans? What are your income streams and profits?

  • Why should I invest in your franchise, and not another?

  • Leadership

  • What is the experience of your leadership team?

  • Who would my contact be as a franchisee?

  • Can I meet and talk with other franchisees?

  • How do you evaluate whether a potential franchisee is a good fit for this business?

  • How do you communicate with franchisees?

  • How do you resolve disputes with franchisees?

  • Financing and Legal

  • What is my investment cost to open?

  • After my start-up costs, how much operating money will I need to break even, and to make a profit?

  • How many franchise locations do you have? How many are profitable? How many fail each year?

  • What are my franchise fees and obligations: rent, utilities, monthly royalty, marketing costs, advertising fees, insurance, legal fees, etc?

  • What are my potential profits? What royalties do I pay? What\'s my revenue stream?

  • How is a location secured? Who holds the lease?

  • What is a franchisee\'s liability and obligations if the business or the franchisee is sued?

  • Training and Operations

  • How does training work: onsite, offsite?

  • What is your ongoing training and support?

  • Is there a written operations manual?

  • How does it work if I have an idea for growing the business? Am I allowed to innovate? Do I get a royalty if my concept is implemented system wide?

  • What steps are taken for quality control? How do you assure my franchise is not damaged by another franchisee\'s failures?

  • Marketing and Sales

  • How do you research and track consumer demands for this product? What is the business plan for my potential franchise?

  • Do I have exclusive franchisee rights to a specific geographic area?

  • Are you a member of any business organizations, such as Chamber of Commerce?

  • Exit Strategy

  • Do you have any plans to sell the business?

  • What are the requirements if I want to sell my franchise?

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This checklist was created by anthonycaliendo

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