7 Important Questions That You Don’t Ask Before Joining A Franchise
Entering a new business is a significant step, and it's essential to understand every aspect of its establishment and operations. If you're considering joining a franchise, it's crucial to prepare a comprehensive set of questions for the franchisor. It's a good idea to revisit these questions to ensure you've covered all the important areas. Typically, people inquire about the company's history, capital requirements, royalty fees, and franchise fees. However, there’s much more you should consider, as basic information alone won't sustain you in the long run. To help you make a more informed decision, we’ve compiled 7 essential questions you should ask before joining a franchise.
How much liquid capital will be required once I join a Franchise Business?
Franchise enthusiasts often focus on the overall investment required to join a franchise, but this alone is not sufficient. It's important to distinguish between the cost of establishing the business and the ongoing operational expenses. Understanding the financial demands of both is crucial. One key aspect to consider is the amount of liquid capital needed. In the early months, franchisees often have to use their own funds to keep the business running.
Reaching the break-even point—where expenses and revenues balance out—can take time. Until then, the business owner must be prepared to cover operational costs without relying on revenue.
Before committing to a franchise, ensure you have a clear understanding of the liquid capital requirements. This capital will be essential for covering salaries, paying bills, purchasing inventory, and managing other day-to-day expenses.
Who are your competitors? What sets you apart from your competitors?
Every business faces competition, and it's crucial to have a clear understanding of both major and minor competitors to assess growth prospects effectively. In some cases, competitors may aggressively challenge a new franchise, making it essential to gather accurate information to avoid potential issues down the line.
Before joining a franchise, consider these key questions about competitors:
- Who are your competitors?
- What are their strengths and weaknesses?
- What is their market position?
To stand out in a competitive market, a business needs unique qualities or approaches. Ask your franchisor how they differentiate themselves from the competition. Understanding their strategies and tactics to outgrow competitors will give you a better idea of the franchise's potential for success
How do you handle manpower recruitment and training?
Hiring the right people at the right time is more challenging than it seems. Recruitment demands significant time, effort, and resources. While some business owners prefer to outsource recruitment, it's often better to partner with a franchisor who handles it themselves. No matter how skilled a recruitment agency is, they may not fully grasp the core essence of your business, as they aren't directly involved in its day-to-day operations. Therefore, it's wise to either manage recruitment yourself or select a franchisor who takes responsibility for recruiting and training your entire team. Be sure to inquire about the specifics of the training provided, especially if the roles require a high level of expertise. Some franchisors even establish dedicated training academies to enhance the skills of their franchisees' staff. Seeking out franchisors who offer this level of support can make a significant difference.
What support do you offer beyond the initial setup?
Recruitment and training are just the beginning—it's important to go further and ask, "What support do you offer beyond training?"
Why is this crucial?
Every business encounters challenges, and as a newcomer, handling unexpected issues can be daunting. For example, you might face a sudden inventory shortage or an unexpected surge in demand for your product or service. In these situations, a reliable franchisor won’t leave their franchise partners to navigate alone. It’s essential to ask whether the franchisor will provide ongoing support after the initial setup. Be specific about the duration of this support, as some franchisors only offer assistance during the establishment phase and early operations. This isn't ideal—you need a support system that remains in place even years after joining the franchise.
Fortunately, many successful and profitable franchises, like Fabrico, offer continuous support at every stage of business operations.
Choose a franchisor who is always available to help resolve issues and keep things on track when challenges arise. Handling major issues as a newcomer can be overwhelming, so having dependable support is crucial for long-term success.
How do you resolve disagreements or disputes?
No matter how well you manage your business, disagreements and disputes are inevitable. These can arise among staff, with consumers, or even between franchisors and franchise staff. Additionally, conflicts with vendors are not uncommon.
It's essential that your franchisor offers a comprehensive support system to provide round-the-clock assistance in such situations. Before joining a franchise, make sure to ask how they handle dispute resolution. Understanding their approach to resolving issues will give you confidence that you'll have the support you need when challenges arise.
What are your expectations from your franchise owners?
Franchisors expect a high level of dedication and commitment from franchise owners, and there are various ways to demonstrate these qualities. It's important to ask what they specifically expect from you as a franchise owner. Some franchisors may require you to dedicate a certain amount of time to managing the business, while others may prioritize adherence to their guidelines and instructions.
Understanding the level of involvement a franchisor will have in your business is crucial. Don’t hesitate to ask what your day-to-day responsibilities will look like and how closely they will work with you in running the business. This will give you a clear picture of what to expect and how to align your efforts with their expectations.
What kind of input will I have in marketing and advertising?
After joining a franchise, it’s important to remember that profits won’t appear overnight. Growing a business requires significant effort in marketing and advertising, which can be challenging to manage on your own. However, having the support of your franchisor can make this process much smoother. Some franchisors take full responsibility for marketing and advertising, making it easier for franchisees to gain recognition. It’s crucial to ask whether your franchisor will support your marketing efforts both offline and digitally.
Take the time to understand their entire marketing process, including strategies, plans, and how they are implemented. These are just a few key questions to ask a franchisor before joining a franchise. Be sure to seek detailed answers to each one, as their responses will help you envision how you’ll run your business. This understanding will also allow you to assess both the business and your own potential as a future franchise owner, setting you on the path to a successful Franchise Business.