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Ten Questions Every Franchisor Should Ask Before Granting a Franchise

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Before granting a franchise most franchisors have a process they follow that begins with qualifying a candidate to ultimately granting a franchise. However, there are certain questions that ought to be mandatory for all franchise candidates.

Franchisors that operate a successful franchise system will most likely have a structured franchising process that begins at the initial franchise inquiry and ends with the execution of the franchise agreement. However, franchisors should consider ways to improve the process and that includes being able to better predict how successful a particular franchise candidate will be. Candidate testing, screening programs and franchisor staff reviews will increase the predictability of future franchisee performance. In addition to these steps here are ten questions that ought to be asked before the franchise transaction is completed. The responses to these questions may provide a different perspective regarding your future franchisee.

  1. When do you expect to reach breakeven?
  2. What do expect your sales will be in six months after opening? After one year?
  3. In the event you need to invest more capital in the franchise how much could you invest and where will it come from?
  4. What are skills do you have that you believe will make you a successful franchisee?
  5. Will anyone assist you in operating the franchise? What are their qualifications?
  6. Do you desire to own more franchises?
  7. Have you considered an exit plan say 5 or 10 years down the road?
  8. If some unforeseen event occurred that would prevent you from operating the franchise who would you depend upon to replace you?
  9. Have you developed a work schedule you’ll follow when you operate the franchise?
  10. What are major concerns you might have about being successful? Have you considered anything that could go wrong?

The way a prospective franchisee responds to these questions can provide an indication of how the franchisee might perform. When asking these questions play close attention to the response.

© 2011 FranchiseKnowHow, LLC

Ed Teixeira is the President of FranchiseKnowHow, LLC. He can be reached at franchiseknowhow@gmail.com

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