Considering buying a franchise? Ask existing franchisee operators about the business before you become a
It is important to do your due diligence before you sign the franchise agreement. Naturally, you will ask the franchisor questions about the franchise, but it’s equally important to converse with owners already in the business. Once you have made a commitment to explore the franchise opportunity (and are not just tire kicking) you should develop a plan to speak with existing franchisees.
Do your best to ask probing questions when you interview a current franchisee. Don’t just scratch the surface. Try to be as objective as possible in evaluating responses. You are making an\ significant investment with franchise ownership. Do not just hear what you want to hear or view things with rose-colored glasses.
It’s essential you talk with both successful owners (often chosen by the franchisor), but also random franchisee owners you call or visit. Don’t worry that the conversation might be awkward. These franchisees have been in your shoes before and understand why you are asking these questions. Be sure to discuss both the positive and negative aspects of the business so you understand the full spectrum of the business.
Here are 17 questions you can ask a current franchisee, ranging from basic to more probing so that you can assess whether the franchise in question is the right fit for you.
Basic questions to ask a current franchisee
1.How long have you been operating the franchisee?
This is a good starter question. The longer they have been in business, the more likely they are to run a successful business. A franchisee who has been in business for a while will have a lot of perspectives to offer. A new owner will still be getting their feet wet and may not be able to offer as much value to you.
2. Do you feel you received sufficient training to operate the franchise?
Franchisors promise to provide great training, but you never know if it will prepare you until after the fact. Prospective franchisee owners should ask if the franchisor’s training was effective. Make sure you also understand the franchisee’s background. Specifically, try asking these questions:
- How were there first few months of operating the location/business?
- Did the training adequately prepare them or was it lacking in some ways?
- Did the operator have prior experience, and if so, how important was it?
- How effective was the marketing training?
3. What factors motivated this franchise investment?
There are plenty of franchise opportunities out there. Ask why they invested in this franchise and whether the decision to do so was a good one in hindsight.
4. What support does the franchisor provide?
Franchisor support is foundational for your success. Franchisors love to say that as a franchisee in their system “you are in business for yourself, but not by yourself.” Ask the current franchise owner how much this rings true. Opening the store is only the first stage of the business, but providing solid support and feedback is perhaps more important in the long run. Does the franchisor only care about its royalty payment? Or are they interested in your long term success?
5. Have your earnings met your expectations?
This is a good gauge question. However, be careful because your expectations and theirs can be wildly different. Make sure your understand what they expected and how it has played out now that they have perspective.
6. How much do you work?
Knowing your work schedule as the owner is a critical component of your investment decision. Its common to work long, hard hours in the first year of operation. If the owner has been operating for several years, ask when they felt comfortable letting up and having staff take over more day-to-day tasks.
If your goal is to be an “absentee” owner than you will need to know the extent that is possible in the franchise system you are exploring. There is no better way to know
7. Are you happy as an owner of this franchise?
This is one of the most important questions to ask. Be sure to ask why they do or don’t feel happy with their decision to become a franchise owner. There is no such thing as a perfect franchise, but generally, owners should feel confident in the brand and their investment.
Probing questions to ask a current franchisee
8. Do you have any specific problems with the franchise?
Ask about issues, whether they be support, communication, territory or sales related. Many problems can be a sign of a
9. What is the least favorite aspect of running this franchise?
This is another way to understand the more challenging sides of being a business owner. Not all aspects of running a franchise are pleasant. Have the courage to ask this difficult question. Everyone dislikes some aspect of the business, make sure you understand how these challenges might impact your own operations.
10. Is the business profitable (after payment of your reasonable salary or wage)?
Every business owner needs to make money. Sadly, some franchisees do not make much in terms of profit, or if they do, the owner may be effectively making minimum wage. Crunching the numbers is critical.
11. Have you ever not paid yourself a wage or salary?
This is another directed question to get to the heart of profitability. Avoiding a salary or distributions might be done for strategic reasons or to grow the business. However, if the owner is doing this, make sure you know why.
12. Is the franchise what the franchisor said it would be?
Ask the franchisee for some perspective. Would they do it over again? Is all the hassle worth it? It’s a subjective answer, but it can tell you how much they believe in the system and its future. Is this a passion project or just another way to make a buck. Either answer may be fine, but if they would do it again, then this could be a positive sign.
13. How often do you hear from the franchisor’s representatives?
Franchising is all about support. A good franchisor will regularly check in and be in communication. Site visits should generally happen at least two to four times a year.
14. Are the systems useful and helpful?
Some franchisors use outdated systems. Computer systems can also cause major headaches for owners and customers. Know if there are major pain points with the computer and/or mechanical systems. Are there plans to fix them?
15. How does the franchisor respond to complaints?
A good franchisor knows how to listen to criticism. Their success and yours are tied. Ask about specific incidents and how they were addressed. How did corporate resolve the issue?
16. What “one thing” would you change if you could with the franchise?
This question can be critical. Especially if you are getting mostly positive responses in your interview with a
17. Do you know other franchisees? What is the current consensus of the health of the franchise?
An active franchisee community can be a sign of a strong system. Is there a formal franchisee