Buying a Franchise: 10 Questions
By Zul • Aug 15th, 2008 • Category: Editor's Pick •
Buying a franchise? Before you do that, look at the following questions, answer them, and evaluate if you’re ready to jump ship.
1. How much is the franchise fee? Do you have a complete range of the fees they offer? What is your affordable range? $10,000? $50,000? $1 million?
2. For a few different sets of fees, have you looked at the real franchise outlet operating? Is the outlet size and operation as what you have in mind? Is it manageable for you?
3. What exactly types of training will be offered by the franchisor? Does the training provide adequate skills and knowledge to you running the franchise? After you hire staff, do you have, in turn train them, or can you get assistance from the franchisor to help out?
4. What about training fees; is it included in the franchise investment you will be committing? Or are you going to spend more money for the purpose?
5. Will you be given any exclusive territorial right by your franchisor (which means no franchisee will be operating within certain radius)? The last thing you want to happen when you operate a 7-Eleven outlet is seeing a new outlet opening just across the road, 10 meters away from your shop.
6. Do you have in mind what will happen if one of you (franchisee or franchisor) terminates the agreement? What will be the repercussion in terms of financial and legal? What obligation you will need to fulfill on the premise, which include equipment leasing, rental, asset purchasing and so on?
7. Who will decide the site or location of the operating outlet? Will you be asked to undertake a research, negotiate a deal and submit your site to franchisor? Or will the franchisor lend you a hand on this? Will the franchisor actually do their work and determine which location you will be operating?
8. You’d probably think that buying a franchise means you won’t work as hard as starting a new business. That’s an urban legend. Are you ready to dismiss this myth? Are you ready to put in long hours and not go for holiday for the next 1 year.
9. How you will be financing your franchise business? Cash? Loan? If it is loan, from which institution? As most financial institutions do not provide 100% financing, have you set aside between 10% to 20% of your own money?
10. What type of role your franchisor will play during your submitting application for financial loan? Will they help you out? Or they will only see you once your business loan is approved?
Other posts you may want to read:
[...] explain above, buying a franchise right is buying a system. It’s already there. The franchisor just need people who can run the [...]