Business
Things such as a good / bad relationship won ’ t show up in a Franchise Disclosure Document , so it won ’ t hurt to visit a franchise and ask a few questions .
6 . What is the business model and how profitable is the franchise ?
Speak to existing franchisees about what works for them . Don ’ t just accept the numbers given to you by the franchisor – it ’ s very important to do your own budget projections and pro forma .
7 . What is the size of your assigned territory ?
Is there any protection for this ? The franchisor is required to tell you the size of the territory and whether it is protected . This refers to how many other franchisees they can appoint in your territory and market .
8 . Do you need to purchase any goods or services directly from the franchisor , its affiliates , or designated vendors ?
In restaurants , for example , food components will almost always be purchased from the franchisor . The franchisee , however , may be able to buy things such as cleaning goods and toilet paper elsewhere at a discount .
9 . What is the company culture like ?
Ask current franchisees whether the franchisor ’ s management consistently interacts with them , as well as the Franchise Council of Australia ( FCA ).
10 . What is the strength and market recognition of the brand ?
You need to determine whether you can build off the brand , or will struggle to introduce it to your market .
11 . How does the franchise use technology ?
Is it still in the dark ages , or is it cutting edge ? Pizza Hut , for example , has lost a big part of the market to Dominos in Australia , which can be partly attributed to Dominos ’ superior use of technology .
Before you start ringing around to existing franchisees , ask for approval from the franchisor first . It is important to show respect and consideration , as the franchisor is assessing your suitability just as much as you are assessing the company . Jumping ahead , therefore , may tell the franchisor that you don ’ t follow protocol and this will concern other franchisees . It is also worth noting that you are buying more than a business – you are buying a way of life . This means that , before you sign , you need to be absolutely certain that you will be happy living this way .
Richard has a 15-year background in franchising and has built several franchise models in the United States , with his current license model in Australia – MobileAppCity . com growing rapidly . He can be contacted at Richard @ mobileappcity . com or 0487896061