While evaluating various franchise opportunities, you need to don your detective cap. You are required to go through each and every document, verify the claims and most importantly, talk to other franchisees in order to make sure of the viability of the franchise offer. In your UFOC, there will be a list of franchisees under the company and on Discovery Day; most top franchises will bring in their best franchisees to talk to the people who have come to buy a franchise. If you want, you can also get in touch other franchisees that are not in the list. But whenever you meet the franchisees, don’t forget to ask them the following questions:
• How long have you been in this franchise business? The longer they stay, the more reliable the franchisor is.
• Is this your first and only unit? If the franchisee is opening another unit, then you can be assured that he is happy with the franchise chain.
• What is the thing that attracted them to buy a franchise? Compare their answers with that of yours and you will know whether you are suited to start business with the franchisor.
• How long did you take to break even? The answer will give you an estimate of the working capital you may need till you break even.
• Are you earning as per your expectations? This question is important too, but you have to first make sure that you are running your business in a same kind of market.
• Has the earning estimate provided by the franchisor come true? Again the answer will be relevant, if you have more or less the same kind of unit in terms of size and operation.
• Was the initial training and on-going support promised in the franchise agreement delivered accordingly? No need to tell why this question is so important!
• Was there any extra or hidden charges and cost other than those mentioned in the franchise agreement? The answer will help you to plan for emergency monetary situations.
• Is the franchise territory big enough? Sometimes the areas may be big in size, but if the target customers are too niche, then it may prove to be quite small.
• Are there any restrictions on what you can sell and use? At times, some things are mentioned in the franchise agreement while others are left for interpretation. The answer to this question will help you know how much flexibility you can have.
• Are designated vendors available? Even if it’s not mentioned in the franchise agreement, the company may have designated vendors from whom you may source your materials.
• How well you are advertised? Don’t forget to ask whether you have freedom in the area of local advertisement.
• Lastly, have you joined the chain with an experience of the business or learned while operating it? It will help you to determine whether your inexperience will help or hinder your growth when you start a franchise.
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