Franchise opportunities

Questions to ask a franchisee

When doing your research for buying a franchise, talking to existing franchisees could be the most vital research you undertake as they are your prime source of information. Who else can tell you what it is really like to own and run a franchise in Australia than someone who has done it?

An ethical franchisor would give you access to all franchisees across their network. They have nothing to hide so would have no concerns about giving you this information. Be wary of any franchisor who does not give you a list of franchisees or only gives you a couple from their network as you can be sure that the names they gave you will be their best performing franchisees and probably not a real reflection of the business.

Visiting a wide range of franchisees will allow you to talk with those who are doing well, those who are doing average and those who are not performing as they should be. In a good franchise network, the reason for those who are not doing well is usually down to personal performance or issues. If everyone else is doing well then you shouldn’t have anything to worry about. If however there is a recurring pattern as to why a lot of franchisees are not doing well, i.e. poor franchisor support, etc, then you should walk away.

You should also be allowed to shadow a franchisee for a day, to get an idea of what a typical day is like for a franchisee. This would help you to grasp a better understanding at to whether it is a role you see yourself in. Ask the franchisor to arrange this for you.

You are also sometimes able to speak to past franchisees who will let you know why they left the franchise. The more people you speak to the better.

Questions that you could ask the franchisees include;

  • Why did you buy the franchise? i.e. what key benefits do you feel the franchise has over its competition?
  • What help and support did you receive at the launch of your franchise? Was it sufficient?
  • And how sufficient was it in the first year of trading?
  • What problems have occurred and how have they been dealt with? Overall is the franchisor supportive and always on-hand to discuss problems etc with you?
  • Do you receive sufficient training if anything in the business changes?
  • Does the franchisor adapt quickly to changes in their market?
  • What marketing/promotion do you receive? Is it sufficient?
  • Do franchisees in your network have any say in company-wide decisions?
  • What are the company’s daily, weekly, annual sales figures typically like?
  • Do you feel that your ongoing franchise fees are reasonable?
  • What was the total cost you paid to purchase the franchise initially?
  • Have you had a return on your investment? How long did it take to recoup it?
  • Are you able to buy more territories once you have built your first business up? i.e. is it a multi-unit franchise opportunity?
  • If you were ill, what provisions would be made for you? Would the franchisor help you?
  • How has the business developed over the period you have been there?
  • If anything, what would you change about the business?
  • If you could do it again would you?

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