Questions to Ask Before Buying a Franchise

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You’ve done a self-assessment and after much inward-looking, you’re convinced that a franchise business model is for you.

There are many reasons why starting a franchise is a good business idea – one of the most factors is that franchises tend to have a higher rate of success than startups. Because a franchisor has already done a lot of the upfront work and become an established brand in the marketplace, in effect, you can take the ball and run with it. However, this doesn’t mean it’s plain sailing, and the next step after self-assessment is finding the right brand.

Success begins with finding the right match.

Questions to ask a franchisor

When you apply to become a franchisee, you’ll need to answer a host of questions before being accepted for an interview. In the same way that a franchisor assesses you thoroughly to ensure you’re a good candidate for their particular business and industry, so should you understand whether the franchise is a good fit for you.

While there will be specific questions to ask related to the industry you’re interested in applying for, unless the franchisor has already offered the information, there are some general questions you should include.

The business

1. Background of the business – Who are the founders, when was the business established, why did they start the business, and how?
2. Associations – Is the company a member of the Franchise Association of Southern Africa (FASA)? If not, why are they not?
3. Financials – Get a sense of the strength and growth of the company.
4. Competition – What are the company’s unique selling points that sets them apart from their competitors?
5. Success rate – How  many locations are there, how many have closed down over the past five years, which ones are the most successful and why?
6. Threats – What threats does the company see in the marketplace and what measures do they have in place to combat these?
7. Conflict resolution – How does the company handle grievances with existing franchisees? Understand upfront what the procedure is, and most importantly, whether the franchisor has a bad conflict record with other franchisees in the past.

Payments

1. Initial investment – Understand in full how much you will need before you can even open your doors. Consider the franchise fee, start-up costs, rent, equipment, licences, etc.
2. Franchise fee – What exactly does this cover? Is training included?
3. Ongoing fees – It’s important to properly understand what other financial obligations you are in for. Will you need to pay for marketing and advertising? Will you have to pay royalties?
4. Operating capital – What is the average amount of time and how much capital will I need for the initial period before I start making a profit?

Franchisee

1. Requirements – What qualifications, personality traits, and skills do you look for in a franchisee?
2. Income potential – What does a typical franchise earn after expenses?
3. Obligations – Get a clear understanding of what is expected of you as a franchise owner.
4. Marketing input – Will you have any say in the marketing within your local area, particularly if you are expected to pay ongoing fees towards marketing and advertising?
5. Location – Will the franchisor assist with advising on a location? What is the proximity of competition and other franchisees?
6. Territory – Will the area where your selected location is be protected from competing branches? How does the franchisor manage this?
7. Termination – If for whatever reason you have to terminate your contract, what is the procedure and what are the repercussions? Can I sell the business? It’s always better to know what to expect upfront rather than be sorry you didn’t when the time comes.

Support

1. Training – Beyond the initial franchise training, will there be ongoing training and upskilling offered?
2. Assistance – What, if any, kind of assistance does the franchise offer, such as a boost on opening day, or any other ongoing support thereafter, such as legal assistance or advice on business insurance or licencing.

Before you leave, ask for a full list of all franchisees within the network and permission to contact them.

In parallel to your franchisor investigations, it’s crucial that you do full due diligence by speaking to a number of franchise owners as well. This will give you a well-rounded perspective of the company and its operations.

Conclusion

Starting your own business is exciting and rewarding but at the same time nerve-wracking. Remember that not all franchise agreements are made equal, so take time to flesh out as many questions you can think of. Not only will this help set your mind at ease but also gather all the important facts and data to make a well-informed decision.

At Supa Quick, peace of mind is the cornerstone of everything we do through ongoing training, performance evaluations, and a consistent approach to service excellence. All of our staff members are constantly improving their skills and enhancing their knowledge on auto fitment standards and associated research and developments. By keeping up to date with the latest trends we maintain our stance as South Africa’s leading auto fitment specialists.

If you’re interested in becoming a Supa Quick franchise, fill in the online form and one of our franchise experts will be in contact with you.

Disclaimer: This content is for informational, educational, or entertainment purposes only. We do not make any warranties about the completeness, reliability, and accuracy of the content.