20 Questions for the Franchisor

When you enter into a franchise agreement, you are taking on a business partner for the life of your franchise. The Franchisor will provide the initial training and on going support for everything from technical issues to marketing advice. To make sure you know exactly who you are going into business with, it is import to thoroughly interview the Franchisor. Many clients tell me they know they should be asking a lot of questions, but they don't know exactly what to ask. Here is a list of questions to help you get started. As you hear the answers to these questions, you will probably think of many follow-up questions that will provide you with the information you need to make an informed decision.

1. What are the strengths of your franchise?
2. Where do you see this franchise system in 5 years and what steps are being taken to reach that goal?
3. Who is your competition?
4. How are you viewed in the consumer marketplace?
5. Can you give me a break down of all of the expenses associated with getting started (franchise fee, equipment, product, training, real estate, etc.)?
6. How much additional capital (working capital) will I need after I launch my franchise?
7. Please explain the contractual responsibilities if I join your franchise system (length of agreement, renewals, etc.).
8. What can I expect to earn if I join your franchise system and do you disclose this amount in an Item 19 Earnings Claim?
9. What does your training program look like? What kind of ongoing training do you offer?
10. What goods or services do I have to purchase directly from you or your preferred vendors, and can I competitively shop for a better deal?
11. Is there an advertising fund that I must contribute to and what rights do franchisees have to audit that fund?
12. What is my protected territory and how is it defined?
13. What are your plans to develop additional franchisees in my state and how will that impact my franchise?
14. How many of your franchisees have failed and why?
15. Will you assist me with financing, real estate selection, and construction?
16. Have you been sued or are you currently being sued?
17. How have previous franchisee/franchisor disputes been settled?
18. What happens when I want to retire or sell my business?
19. If I sell my business and leave the franchise system, what am I forbidden to do?
20. What is the biggest complaint from your franchisees?

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