Questions to Ask Before Investing in a Franchise

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Top 20 Questions to Ask Before Investing in a Franchise
So you want to invest in a franchise. You've done your research and looked into what type of franchise you're interested in running, and perhaps you've even connected with a franchisor in your area.

Before your initial meeting, it's important to ensure you're prepared by knowing what questions to ask. Investing in a franchise has many benefits; you gain independence; you’re likely to be successful because of the support from the franchisor; and you get to be your own boss. However, each company is different. Just how much autonomy you have and support you receive will vary greatly depending on the franchisor—and that's just the tip of the iceberg.

There are a number of questions you need to ask your franchisor before knowing india phone number list if you've found the right franchise. Continue reading to discover what these key questions are.

1. How Did the Franchise Get Started?
Before you invest in a franchise, it's important that you choose a company that's a good fit for you. You will become part of a conglomerate, so it's important you have a good relationship with the franchisor. While you likely have already done your own research about the franchise, it's still important to learn as much as you can about the company's background—particularly about the founder's motivation for starting their franchise business. That way, you can establish if your passions and values align.

2. What is the Background of Your Executives?
It's important to know who you're going into business with. Ask about the history and work experience of the founders. Are they from a similar industry as your own? By learning as much as you can about the founders, you'll also fill in any knowledge gaps you have about the franchise's inception.

3. What is Your Criteria for Choosing a Franchisee?
Usually, franchisors have a list of personality traits and qualifications they are looking for in a franchisee. The purpose of this vetting system is to establish whether or not you are a good fit for the company. It's important to investigate what criteria they're looking for—because it's also an opportunity for you to determine if you feel your personality, skill set and values align with the franchisor's.

4. How Much Do I Have to Invest Before I Can Open My Doors?
Depending on the size of the company, the initial investment for starting a franchise can range from thousands of dollars to upwards of a million. Be sure to comb through your Franchise Disclosure Document (FDD) and talk with the franchise's rep to ensure you're on the same page about cost expectations. Before signing a franchise agreement, you should know:

The initial franchise fee.
Additional start-up costs, such as real estate, equipment, licenses etc.
Knowing these costs will give you a clear idea of how much your initial investment actually costs, and what you will need financially to get started.

5. How Much Liquid Capital Will I Need to Cover the Franchise Until it Breaks Even?
Like any business, it will take a few months before your successful franchise breaks even. However, aside from initial start-up costs, you also need enough operating capital to cover you for the first few months until that happens. This length of time will also vary depending on how long the franchise location has been open—say you're taking it over from someone else—and the kind of brand recognition the location has.

To be financially prepared, you should ask about the average amount of time it takes most franchisees to start turning a profit. That way, you can feel confident about pursuing your new role as a franchise business owner without the added stress of not having enough capital to cover your first few months in operation.