Thursday, October 4, 2012

5 Questions to Ask Before Buying a Franchise – GEC Business Review

By Kelvin Wong

Many entrepreneurs tend to ask pretty standard questions when it comes to considering franchise business. Some first floor questions like, “How much money can I make?” “How much will I have to invest?” “Is the franchise business exclusive?” etc.

In fact, the higher you go in the building, the more detailed the questions get. It is critical for a franchisee candidate to question before signing the franchise agreement. Here are the top 5:-

ONE. What is the first year operating support?
Most good franchise systems, understanding how important the first year of franchise ownership is and how likely a new owner is to struggle, thus providing extra support and coaching. There are all kinds of ways of offering support. It is very important for any franchisee to know what kind of assistance he/she will be getting.

TWO. Any ongoing training and development programs are available?
A good franchise system understands that the franchisees need to keep their skills upgraded, and franchisees in the system need to stay abreast of best practices. Simply, ongoing training opportunities are great for franchise owners to give franchisees the tools to succeed.

THREE. What are the most common problem areas in the system, and how does the franchisor help solve them?
The test of a good franchise system is not how well it works with top performers. Indeed, it depends on how it helps franchise owners when they struggle. Even the smartest and hardest-working business owners in rock-solid systems run into challenges. When it happens, the franchisor’s operations staff should be prepared to help the owner respond to the problem effectively.

FOUR. What types of insurance should I have?
It is important to be protected in case of accident or natural disaster (this is crucial especially true in food franchise systems), and one franchise owners should include the expense in the budget.

FIVE. What is the working culture among the franchisees?
A culture of good cooperation among franchise owners can make the difference between success and failure, and a good franchise system goes out of their way to foster good will.

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