What Franchise Questions Should I Ask?

Buying a business is a big investment with no guarantee of return. Investing in a franchise with a trusted, well-known name is a little less risky, but there are still no guarantees. New entrepreneurs are often at a disadvantage because they don’t know what they don’t know. They need to learn more about franchising, but don’t know which questions to ask a franchisor, or how to evaluate the answers.

The franchise discovery process can be broken down into three main stages: exploration, consideration, and decision making. By doing your due diligence, you can navigate each segment with confidence and increase your chances of making a successful investment.

Franchise Territory Defined

A franchise territory is a designated geographic area granted by the franchisor. The franchisee is given sole rights to market, sell, and provide the company’s products or services within that area. This allows franchisees to build a customer base and expand their business within a defined space.

Franchise Questions to Ask During the Exploration Stage

The exploration stage is the time to research different franchise opportunities and identify those that align with your interests, skills, and finances. You’ll want to speak with representatives of the franchises you’re interested in. The questions you ask now will help you decide which opportunity is right for you later.

• Describe your business model for me. If you aren’t onboard with the way a particular franchise does business, it’s not the one for you.
• What are your core values and mission? Well-defined core values and a strong mission show that the company is committed to a purpose beyond earning profits.
• How long have you been in business? Try to identify franchises with a proven track record. Brands that have been in business for several years likely have tried-and-true procedures and processes.
• What sets you apart from your competitors? Understanding the franchise's unique selling points will help you evaluate its market positioning and potential for growth.

Franchise Questions to Ask During the Consideration Stage

Once you've created a shortlist of potential franchises, you'll need to conduct more in-depth research to evaluate whether the franchises on your list align with your business goals and personal preferences. Here are some questions to ask franchisors:

• What are the total costs and fees associated with the franchise? Understand the initial investment as well as any ongoing fees. The initial investment will likely be listed in a range. Ongoing fees like royalties or advertising fees are typically a percentage of gross sales.
• What are the franchise’s key performance indicators (KPIs)? A franchise that shares clear and measurable KPIs gives you a better understanding of its financial health and profit potential.
• Is the franchise involved in any litigation? Unresolved legal issues are a huge red flag. Any controversy that weakens the brand will affect all the franchisees.
• Can I speak with current franchisees? If the answer is no, or if they never give you any contacts, you may want to reconsider continuing the discovery process with the brand. This may indicate their franchisees are unhappy.

Franchise Questions to Ask in the Decision Making Stage

In the last stage, you'll review all the information you’ve gathered and make your final choice. Below are some questions to ask when buying a franchise:

• Can I review the franchise agreement with a lawyer? If a franchise discourages you from consulting a lawyer, there may be something in the paperwork they hope you’ll overlook. Most brands will encourage you to consult with a lawyer so you fully understand the agreement.
• What are the renewal and termination terms? Beware of franchise agreements that force you into long-term commitments without an option for renewal or an exit strategy.
• How will the franchise handle conflict and disputes? A franchisor unwilling to discuss conflict resolution may be challenging to work with in the future.
• What’s your turnover rate? A high turnover rate suggests that franchisees might not be satisfied with the support or profitability of the franchise.

Finding a Franchise You Can Trust

Still not sure if the franchise is right for you? The International Franchise Association (IFA) has an even more detailed list ofquestions to ask when evaluating a franchise.

Entrepreneurs looking to start a cleaning business may want to consider Two Maids. Our brand ranked No. 302 on this year’s Franchise 500 ranking by Entrepreneur magazine. Plus, we’re backed by Home Franchise Concepts, a well-known name in franchising that’s been around for more than 30 years. If you’re ready to start the franchise discovery process, contact Two Maids today. One of our franchise advisors will provide all the answers your need, so you can decide whether buying a Two Maids franchise is the best investment for you.