Before you jump into the franchise business, it’s crucial to have a clear picture of what you’re getting into. Let’s tackle those key questions you should be asking, now including insights on revenue sharing and your role in operations:
1. What’s the full cost of getting started?
Getting involved in a franchise isn’t just about the initial investment. There are ongoing costs to consider, from setup expenses to the day-to-day running of the business. Make sure to inquire about the liquid capital required for the early stages, covering everything from employee salaries to inventory.
2. How is revenue shared?
Understanding the financial arrangement with your franchisor is vital. Ask about the revenue sharing model – how and when you’ll see profits and what percentage goes back to the franchisor. This clarity is essential for financial planning.
3. Who are we up against?
Knowledge of your competitors is critical. Identify both direct and indirect competitors, their strengths, weaknesses and their market positions. This information will help you strategize for success.
4. What sets us apart?
Discover what makes your franchise unique in the competitive landscape. It could be the business model, customer service approach, or product offerings. Knowing these unique selling points will help you leverage them to your advantage.
5. Does a franchise partner need to be active in the operations, or is it totally managed by the franchisor?
This question will clarify your day-to-day involvement in the business. Some franchisors require franchisees to be hands-on, while others may handle much of the operations themselves. Knowing this upfront helps set expectations and aligns your commitment.
6. How does recruitment and training work?
The right team can make a significant difference. Inquire about the franchisor’s approach to hiring and training – whether they manage it or if it’s your responsibility. Also, ask about the training programs in place, especially for specialized skills.
7. What support is offered after setup?
Beyond the initial setup, ongoing support from the franchisor is crucial. This could range from operational advice to help during unexpected challenges. Confirm the extent of support provided to ensure you’re not doing it alone after opening.
8. How are disputes handled?
Understanding the process for resolving disagreements – whether with employees, customers, or the franchisor itself – is important. A solid conflict resolution plan indicates a franchisor that supports its franchisees through thick and thin.
9. What do you expect from franchisees?
Clarity on what’s expected from you as a franchisee partner, from operational involvement to adherence to brand standards to business growth, ensures you’re in sync with the franchisor’s vision.
10. How involved can I be in marketing and business promotions?
Knowing your role in marketing and advertising efforts is key. Some franchisors provide comprehensive support or may require you to take the lead. Understanding these expectations will help you plan for success.
By asking these detailed questions, you’re not just gathering information; you’re building a foundation for a successful franchise partnership. It’s about ensuring you and the franchisor are aligned in both vision and operation, setting the stage for a profitable venture.
