Investing in a franchise isn’t a decision to take lightly. And if you’re new to franchising, you may be overwhelmed by the information you find. That’s why we’ve put together this 2-part series about the questions every potential franchisee needs to consider before entering into a franchising agreement.
Part 1: Questions to ask yourself about your own suitability.
Part 2: Questions to ask related to the franchisor.
- Do you know the franchisor?
Most franchisors want to make a good impression on you. Their brochures are slick, and their selling process is well-developed and executed. Although a franchisor may appear solid, it’s important to learn about him or her on a deeper level. What’s behind the seemingly nice person with a winning smile and a great golf swing? Is the opportunity as solid as the glossy brochure leads you to believe?
You’ll only know the truth when you ask around and do your research. When in doubt, walk away—there are plenty more opportunities to choose from.
- Can your hobby become your business?
If there’s a franchise related to your hobby, you may think it’s a perfect match. But, before you jump in based on interest alone, do a little self-exploration. Consider what makes your hobby so enjoyable. Is it the solitude? The pleasure of doing something for yourself? The relief that comes with a zero-pressure activity? Would your feelings about your hobby change if it became work?
- Are you ready to be on your own?
If your calling card is self-reliance, congratulations! This means you’re accustomed to taking care of yourself and doing what needs to be done. Successful franchisees work hard to make their businesses the best they can be.
Before you go out on your own—and remember that a good franchise comes with support, so you don’t feel alone—you must determine your financial readiness. Evaluate the opportunity in detail and see if it will allow you to meet your financial goals. Reviewing your financial situation isn’t the most exciting part of investing in a franchise, but it’s essential.
- Is the franchise culture a good fit?
What’s the culture of the franchise you’re investigating? What kind of people are drawn to the business and how would you fit into that environment? The other franchisees and the people at the headquarters will be your virtual team so pay attention to your feelings when you meet them. If it feels like a bad fit, walk away.
- Do you understand the terms of the contract?
Franchising is a relationship between a franchisor and franchisee, governed by a written agreement—the contract. While you’re investigating a franchisor, you’ll meet franchise executives and salespeople who may make promises. Remember, the only legally binding obligations and promises—the franchisor’s obligations to you, and yours to the franchisor—are in the contract you sign.
You must understand what you’re signing. Due diligence includes hiring an experienced franchise attorney to help you understand the contract and point out any red flags. Your attorney should specialize in franchise law because franchising is a complex business and legal relationship. Any business advisors you consult should understand franchise relations and, ideally, the industry your franchisor operates in.
Understanding the agreement starts with reading it and making a list of questions and concerns. Review the promises made during your discussions with the franchisor and make sure they’re covered in the agreement you received. Discuss any concerns with the franchisor and once your concerns are addressed, work with your attorney to finalize the agreement.
Now you know the top questions to ask yourself before pursuing a franchise opportunity. But what questions must you ask while investigating the franchisor? Read Part 2 of our series to find out! (Coming soon)
Take control of your lifestyle with a solid business system.
Hand & Stone is the most relaxing massage and facial franchise investment opportunity in Canada. Our proven business model allows franchise owners to profit from the booming health and wellness market and meet consumer demand for luxurious yet affordable spa services. Find out more about becoming a Hand & Stone franchisee by reading our blog or connecting with us directly.