Understandably, you will have many questions as you go through the process of buying a business. Make sure you’re asking the right questions in order to better understand the opportunity a franchise you’re considering can provide. While the franchise disclosure document and other research you do on your own will give you ample information about a franchise, questions like the following can sometimes provide insight you wouldn’t otherwise get.
Questions to ask the franchisor
When buying a business like a franchise, it’s imperative that you find the business that’s the best fit for your skills, experience, and interests. Franchises come in every shape, form, and industry, not to mention budget. Some require you to be hands-on with the day-to-day, while others, you can let someone else manage while you concentrate on your day job. Ask yourself the following questions to narrow down your list to the ideal franchise.
1. Am I experienced in this industry?
While it’s not always a requirement that you have experience in a given industry, it can make your work easier if you understand the niche you’re getting into. If you’ve never worked in food services before, as an example, you might have a huge learning curve as you absorb everything you need to know about stocking inventory, hiring inexperienced help, and interacting with customers. Consider how much learning you really want to do on the job before you jump into a field you know nothing about.
2. Does it fit my lifestyle goals?
You probably have an idea already of how you want to work. Maybe you are looking for a home-based franchise that will give you flexibility to pick up the kids each day after school, or you want a franchise that you can hire a manager for. Maybe you want one that requires minimal overhead, like a vending machine franchise. Whatever you want your life to look like around work, you need to find a franchise that will fit your needs.
3. Does this franchise have good revenue potential?
Naturally, you will need to do your homework to ensure that not only the specific franchise you’re considering but also the niche it’s in as a whole are on the rise. Avoid flash-in-the-pan concepts that might not make it through the year and instead focus on industries with long-term growth potential. Talk to others to ensure that the franchisor has a good reputation, and meet with a small business advisor at your local bank to get advice on what programs are available to finance your franchise, as well as understand how long it might take you to reach profitability.
4. Does this business excite me?
Above all, you should like the business you buy. It should make you excited to get to work each day, to see how you can change the world, in whatever small way, through your work. Buying a franchise is a long-term relationship, so you want to make sure you can commit for the long haul.
5. Is this franchisor the right fit?
Naturally, the franchisor also wants to make sure you’re a good fit as a potential franchisee, so you can work together to make sure the two of you are the perfect pair. Ask the franchisor if you can work in an existing franchise or shadow a franchisee for a day to see what a day in the life of being a franchisee with this brand is like. This can give you better insight into whether it’s right for you than reading the franchise disclosure document. Also ask whether the franchisor has any tools like financial templates or business plans that can help you better analyze the franchise concept and help you make a decision. Typically the franchisor will have ample resources for that very purpose.
Take your time with this decision, as it’s an important one. You want to find a franchise that not only you are excited about, but one that sets you up for success.
Contact Jeff Thomas to discuss: 905-988-4042 x2304 or Jeff.Thomas@meridiancu.ca
