|
|
Purchasing a franchise is a major investment decision. Not every
franchise is ideal for every individual. The KIP Business Report recommends that
you ask a number of questions when considering purchasing a franchise. We've
prepared a comprehensive checklist of actions you should consider before making
the plunge.
Check-out the Franchisor
Who are the key players associated with the franchisor including major
shareholders, officers and directors?
How many years has the franchisor been operating?
How many franchises does the franchisor have?
Are they growing, shrinking or flat lining?
Find out What the Franchise Relationship Will be Like
How does the franchisor select prospective franchisees?
How do you qualify?
How does the franchisor monitor your operations?
Does the franchisor periodically inspect all of the franchisees?
Does the franchisor ask for franchisee input for marketing strategies, new
product development, etc.?
Determine the Costs
How much is the initial franchise fee?
Is there a deposit?
How much is refundable?
Under what circumstances?
Does the franchisor offer financing?
Are there government or non-profit funding programs available?
Research the Product or Service
What makes the franchisor's product/service unique?
How long has the product/service been on the market?
Is the product/service in hot demand or is it constantly needed?
What products must be purchased from the franchisor or designated
supplier?
Find out About the Location
Is your franchise territory exclusive?
If not exclusive, is there any territorial protection?
Will there be other outlets opening near your territory?
Does the franchisor sell its products through other channels?
If so, what are these channels?
Talk to Current Franchisees
What was your total investment for the franchise?
Did the franchisor provide effective, thorough training?
How long was the training?
How long did it take for you to receive a reasonable salary?
Are they easy to work with?
Do they treat you like a partner or a competitor?
Check out the Contract
Are the franchise, the location and the territory clearly described in the
contract?
Does the contract clearly describe the duration, type and cost of the
training to be provided by the franchisor?
Are all fees, licenses, or royalties clearly spelled out?
What type of records and reports are you required to provide to the
franchisor?
Learn About Their Support Services
Will the franchisor choose the site or assist you in selecting the
appropriate one for your business?
Does the franchisor build the premises? If not, does the franchisor
specify the design of premises layout and displays?
What continuing management assistance will you receive?
Will they direct you to appropriate funding sources?
|
