Are You Suited to Be a Franchisee?
by Jeff Elgin
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Checklist for Interviewing Existing Franchisees
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Use this questionnaire when trying to investigate franchise opportunities
by interviewing existing franchisees.
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Financial
34. Are you satisfied with the franchisor?
35. Is your franchise profitable?
36. Have you made the profit you expected to make?
37. Are your actual costs those stated in the offering circular?
38. Is the product or service you sell of good quality?
39. Is delivery of goods from the franchisor adequate?
40. How long did it take you to break even?
41. Was the training provided to you by the franchisor adequate?
42. What is your assessment of the training provided?
43. Is your franchisor fair and easy to work with?
44. Does your franchisor listen to your concerns?
45. Have you had any disputes with your franchisor? If so, please specify.
46. If you have had any disputes, were you able to settle them?
47. How was your settlement accomplished?
48. Do you know of any trouble the franchisor has had with other
franchisees? If so, what was the nature of the problem?
49. Do you know of any trouble the franchisor has had with the
government?
50. Do you know of any trouble the franchisor has had with local
authorities?
51. Do you know of any trouble the franchisor has had with competitors?
52. Are you satisfied with the marketing and promotional assistance the
franchisor has provided?
53. Have the operations manuals provided by the franchisor helped you?
54. What do you think of the manuals?
55. Are the manuals changed frequently? If so, why?
56. Other comments you would like to make.
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Use this checklist when doing your own investigation and information gathering.
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57. Is the franchisor a one-person company?
58. Is the franchisor a corporation with an experienced management that
is well trained?
59. Does the franchisor operate a business of the type being franchised?
60. Is the franchisor involved in other business activities?
61. Is the franchisor offering you an exclusive territory for the length of
the franchise?
62. Can the franchisor sell a second or third franchise in your market area?
63. Do you have the right of first refusal to adjacent areas?
64. Will the franchisor sublet space to you?
65. Will s/he assist you in finding a location for franchise operation?
66. Must you least fixtures, signs or equipment from the franchise? If so,
are the prices reasonable?
67. Does the franchisor provide financing? If so, what are the terms?
68. Does the franchisor require any fees?other than those described in
the offering circular?from the franchisee? If so, what are they?
69. Has the franchisor given you information regarding actual, average or
forecasted sales?
70. Has the franchisor given you information regarding actual, average or
forecasted profits?
71. Has the franchisor given you information regarding actual, average or
forecasted earnings?
72. What information have you received?
73. Will the franchisor provide you with the success rates of existing
franchisees?
74. Will the franchisor provide you with their names and locations?
75. Are there any restrictions on what items you may sell? If so, what are
they?
76. Does your prospective franchisor allow variances in the contracts of
some of his/her other franchisees? What is the nature of the variances?
77. In the event you sell your franchise back to your franchisor under the
right of first refusal, will you be compensated for the goodwill you have
built into the business?
78. Does the franchisor have any federally registered trademarks, service
marks, trade names, logotypes and/or symbols?
79. Are you, as a franchisee, entitled to use them without reservation?
80. Are there restrictions, exceptions or conditions? If so, what are they?
81. Does the franchisor have existing patents and copyrights on
equipment you will use or items you will sell?
82. Does the franchisor have endorsement agreement with any public
figures for advertising purposes? If so, what are the terms?
83. Has the franchisor investigated you carefully enough to assure
himself/herself that you can successfully operate the franchise at a profit
both to him/her and to you?
84. Has the franchisor complied with FTC and state disclosure laws? Are
there any regulations specific to the industry in which your franchise
business will operate? (Include any special licenses or legal restriction on
operations set by statutes.)
85. Does the franchisor have a reputation for honesty and fair dealing
among the local firms holding his/her franchises?
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Excerpted from Franchise Bible: How to Buy a Franchise or Franchise Your Own Business
(Entrepreneur Press) by Erwin J. Keup
Material copyright © by Entrepreneur.com, Inc. All rights reserved.
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