PURCHASING A FRANCHISE: QUESTIONS FOR FRANCHISEES

By Michael D. Cross, Jr., J.D.

In determining whether to purchase a franchised business, it is important to investigate and consider the franchise opportunity. A purchaser may obtain much information from the Uniform Franchise Offering Circular and proposed Franchise Agreement provided by the franchisor; however, it is important to know that this is not all the information necessary or appropriate to make the decision to purchase a franchise. In addition to asking questions of the franchisor, it is often helpful to speak with other franchisees in the system.

Among the questions to ask franchisees are:

• What type of business experience did you have before purchasing this franchise?
• Do you believe the training you received from the franchisor was sufficient to help you run this franchise efficiently?
• What additional training do you believe would be helpful to a new franchise?
• Did you purchase an existing franchise or start a new one?
• Do you own any other franchises in this system or in other franchise systems?
• Did the franchisor provide an accurate estimate as to the costs of starting and operating this franchise?
• Were there any costs or charges that you did not expect (whether assessed by the franchisor or by others)?
• Are you restricted as to the vendors you may use?
• Does the franchisor advertise as much you thought it would? As much as you believe is appropriate?
• Is the territory you have been allocated sufficient to allow you to meet your goals?
• Are your earnings in line with your expectations?
• If you could go back in time to when you purchased this franchise, would you do it again?
• What would you change?
• Are you happy with the franchisor?

Though these questions will not necessarily lead to all the information a purchaser needs, the answers may help substantially and guide a purchaser in making the decision as to whether to purchase a franchised business.