A crucial step in the process of purchasing a franchise (Juice Franchise or QSR Franchise) is a thorough due diligence review to ensure you are making an educated decision before deciding. Below is an in-depth list of questions for soliciting a prospective franchisor during the research method.

Top Questions to Request When Polling Franchisors:

  1. How did the franchise get created and what is the experience of your executives? Who were the creators? What was their reason for starting the company? Do you possess equal skill groups and a passion for the business? Finding the ideal match needs not only that you feel the franchisor has good experience, but that you place with the fundamentals of the business.
  2. What are your criteria for selecting a franchisee?  Franchisors typically have a list of capabilities and character traits that fit best with their label. It’s important to examine those standards and decide whether you feel your character and skill developed to fit within the system.
  3. How much do I keep to support before I can open my doors? The initial investment for creating a franchise can range from a few thousand dollars to better than a million. Item 5 of the Franchise Disclosure Document (aka FDD) lists the initial franchise cost, and Item 7 details additional start-up costs such as real estate, tools, support, etc. Be sure to examine these items in deep with the franchisor so that you have a clear understanding of your buy and what you will require financially to get up and running.
  4. How much liquid money will we need to keep to cover the franchise until it hurts even?  Aside from the initial start-up costs, franchisees must enough working capital for the first several months until the firm breaks even, so it’s crucial to find out the average value of time it takes most franchisees to begin turning a profit so that you can be financially prepared.
  5. What are the ongoing costs? How do your royalties and marketing costs function? Take the time to comprehend your ongoing financial commitments to the franchisor including whether or not you are bound to pay a royalty or other continuing expenses such as for advertising. Understanding this is important for controlling the financial soundness of your company.
  6. How financially healthy is the franchise business? A franchisor’s most recent economic statements can be seen in Item 21 of the FDD and can give you an indication of the franchise plan’s financial image. Ask the franchisor to demonstrate how they have demonstrated continued growth and around their growth plans.
  7. How many other sites are there and what is your win rate? The digit of units a franchisor has defined their size but not necessarily their win. Are the franchisees acquiring ample help? A large franchisor may be spread too thin while an up-and-coming franchisor may not have adequately help. Ask what the hit rate is among their franchisees and what the reasons are for fallen units.
  8. How much banknotes can we create? Though a franchisor can’t predict your win, it should have a good thought regarding what a typical franchisee rates and your revenue possibility. Be aware that the franchisor may offer information about gross sales which don’t include expenses for rent and other running expenses.
  9. What puts you apart from your opponents?  While the market for some brands is positively competitive and watery, others are more innovative and amazing. Where does the trademark fall along the range? What is the level of competition in the market and who are the top contenders? Ask the franchisor regarding their special selling points and their benefits over the match.
  10. What help do you offer beyond the initial activity?  Most franchisors offer initial exercise to get your company up and running, but you’ll like to find out what kind of ongoing help is open and how it corresponds to what comparable franchisors offer. What support staff will be available to you on a day-to-day basis? Are there ongoing internship options? Is on-site service available? Make sure you feel satisfied with the level of help that will be available to you after you unlock your doors.
  11. How do you settle disputes or disputes? A crucial part of due diligence is investigating the franchisor’s law history.
  12. What are your anticipations of your franchise proprietors? As a franchisee, there are many expectations put on you about costs, operations and other duties per the franchise contract. It’s important to have a discussion with the franchisor to achieve a clear knowledge covering what is required of you as a unit operator.
  13. What will my part be and how will it be saved? Learn how the franchisor manages parts for its franchisees and what privileges you have under the contract. Does the franchisor help the right to approve the establishment of your franchise? Will you have an entire or covered territory?
  14. What type of input will I have in trade and advertising? You will likely be bound to contribute to a regional, restricted and/or national advertising fund as part of your contract. Ask the franchisor if you will have any voice in how that banknotes is spent and what options there are for dealing in your local region.
  15. What is a regular day like for a franchisee? Learning around the day-to-day tasks and objectives of a typical franchisee can assist you get a clear view of your daily work energy. In addition, it’s important to question regarding the greatest challenges most franchisees meet to help you determine whether the franchise option will be a right fit for you.
  16. Can I talk with existing franchisees about their knowledge? This is a vital part of the due diligence research. Franchisors are required to disclose the connection information for both present and past franchisees. Speaking with both can offer you an unbiased view on how the franchise system operates and its postive and negative. Be very cautious of any franchisor who attempts to prevent you from running out to other operators.