Getting Ready to Franchise: Critical Questions to Ask
You’ve done your research, crunched numbers, and are ready to say goodbye to your 9-5 corporate gig. Finding the perfect franchise opportunity is top-of-mind, and you’re ready to sign on the line, fork over your initial investment, and get to work!
Enthusiasm is admirable. But when it comes to choosing a franchise, careful consideration and strategic due diligence are a must.
Do you know what questions to ask a potential franchisor before making a commitment?
Asking the right questions before taking the plunge is a critical step in building any successful business, and franchising is no different. The answers you uncover during your research can make the difference between a successful, satisfying business and an outright failure. The following are good questions to ask before joining a franchise.
Interview the Franchisor
Franchisors interview prospects to determine if they’re a good fit for the organization; as a potential franchisee, match their mindset. Is the company transparent, financially sound, and reputable? How do they support their franchisees throughout the lifecycle of their business? Interview the corporate team, other franchisees, and continually ask yourself: Is this business the right fit for my lifestyle, goals, and temperament?
How Much Can I Make?
Naturally, you want to know how much money you’ll make. A good franchisor will not only give you stats on growth and help set cost and profit expectations, they’ll also help you budget and plan for emergencies.
Unfortunately, how much you’ll make in a franchise isn’t a cut-and-dried answer. Franchisors risk legal action if they promise you’ll make a certain amount, so you may find there are no hard and fast answers. However, detailed Franchise Disclosure Documents (FDDs) should provide solid financial performance projections.
The best way to get an idea of how much money you can make is to speak with other franchisees and make sure the franchisor has a detailed FDD.
Surprisingly, only 30 percent of franchisors include these critical documents, and to make matters worse, they’re not always accurate. At The Junkluggers, we provide a clear FDD with plenty of information to help you make your decision.
Does the Company Culture Align With Your Goals and Values?
Every franchise operates under a set of core values established by the franchisor. Working in a job that undermines or contradicts your values will cause misery for both franchisee and franchisor.
The decision to become a franchisee must include questions that determine how well you’ll mesh with the organization’s goals and standards. Ask questions that will give you hints if the franchise is a good fit, such as:
- What’s your policy on flexible scheduling?
- How much autonomy will I have over the hiring and training processes?
- How much access will I have to you and other advisors?
- Do franchisees have any involvement in shaping the future and direction of the company?
Identify the values that are most important to you, and craft your questions around those values to draw out the information you need.
All things considered, the culture of a franchise business should be readily apparent when you visit. At the Junkluggers, we can’t conceal the fun we have while we work, and many franchisees have said that the jubilant atmosphere was a major factor in their decision come on board.
Trust your gut when you visit locations and ask as many questions of franchisees and the corporate staff as possible.
What Are My Financing Options?
The FDD may include boilerplate information about financing and available options, but always ask the franchisor for greater detail.
If financing options are available that allow you to spread franchise fees or royalty payments over a certain amount of time, you need to include those costs in your financial projections. Some franchisors may even offer to finance the fees themselves for exceptionally qualified franchisees. At the very least, your franchisor should be able to refer you to financial institutions that assist with franchise finance.
How Do You Spend Your Day?
Understanding how franchisees spend their days will give you many unique insights. If they’re running ragged all the time, don’t count on them having time to take you under their wing and offer guidance on challenging business issues. If the corporate staff and franchisees spend their mornings golfing (unlikely) and the afternoons lounging by the pool (rare), you’ll know they’re not making their business – or franchisees – a priority. Look for balance in a franchise culture; don’t join an organization full of slackers, or one that works their franchisees to death.
Ask what percentage of their time they spend in franchise locations or interacting with franchisees and clients. Additionally, be sure you have a clear understanding of what kind of access you’ll have to the franchisor.
At the Junkluggers, CEO Josh Cohen encourages his franchisees to call or text him directly with any and all questions or concerns: this is one of The Junkluggers most valuable differentiators.
In many cases, franchisees have limited contact with the CEO and are left to sink or swim after the first 90 days of operation. This isn’t the case at The Junkluggers. CEO Josh Cohen, along with the entire Junkluggers organization, genuinely wants every franchisee to succeed. Count on corporate and other franchisees to take a personal, vested approach to the development of your business from day one.
Buying a Franchise is a Major Investment
Buying a franchise is not an easy decision: It’s a major investment and will be a huge part of you and your family’s lives for years to come. So, never sign a franchise agreement until you have all of your questions answered, your concerns assuaged, and your challenges acknowledged.
If you’re interested in learning more about a Junkluggers franchise, download our franchise kit here. Feel free to contact us with any questions you may have, and we’ll be in touch within 48 hours.