| Questions
To Ask Your Franchise Company
1. What is the risk involved with franchising and how do you (the franchiser)
intend to minimize that risk?
2. What happens if I decide
I no longer want to operate the franchise? Do you (the franchiser) have a
policy that requires me to pay a cancellation fee?
3. Do you have any lawsuits against
your franchise? May I see the list of lawsuits?
(Look at reasons sited
to see if there is a pattern).
4. What is your franchisee turnover
rate? Can I have a list of the franchisees that left?
5.
How much money can I potentially earn? - They should not answer this question,
as the law prohibits them. Be careful of the ones who do answer this.
6.
Do the company-owned stores provide most of the support for the parent company?
(Should be a yes to avoid over-dependence on the royalty stream).
7.
Is your franchise trademarked? (Should be because it's what you are buying
with the franchising fee).
8. How long is your franchise-training
program? (Don't want it to be too short/long).
9. Can I see
some of your company's financial statements?
10. Can I have
a list of all the current franchise owners close to my area? (Speak to the
owners and discover their level of satisfaction and profitability).
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