Entrepreneurs who don’t want to deal with the difficulties of building their own company find comfort in the notion that they can own a business by purchasing the franchise of a popular business brand. Additionally, if you wish to operate your own company, purchasing a franchise of an established brand provides you leverage.

If you plan to purchase a franchise in the United States of America, it will be in your best interest to ask the franchise consultant the proper questions. Otherwise, you risk purchasing the franchise of a failing company. It is possible that you don’t have enough experience to ask the appropriate questions.

In this case, you can consult business professionals to assist you in making the best choice, but if you don’t have the money for that, you can find this article to be very helpful. Let’s now look at the 20 most crucial queries you should ask a franchise consultant before investing in a franchise.

Most Important Questions to Ask a Franchise Consultant

  1. The Track Record of the Company Selling the Franchise

Asking about the company’s track record should be the first thing that prompts you to contact any business that is selling a franchise. Unless you know someone who is succeeding with their franchise, you should think twice before purchasing a franchise of the company.

  1. Why Are They into Franchising

There are a variety of reasons why a company owner can desire to enter the franchising industry. You need to conduct your own research as you do not have to accept the seller’s explanation wholeheartedly. To find out more about the company and its franchise concept, speak with your neighbors or customers.

  1. How Did the Business Fare in the Last Five Years

Before purchasing a franchise, you should also ask the franchise consultant about the company’s success story. Find out what the company’s accomplishments and testimonies are that they are proud of and will be willing to share with the entire globe. If they don’t, you might want to rethink your choice of franchise.

  1. Ask About the Profitability of the Franchise During the Peak Period

The truth is that no one would want to invest in a franchise that was not successful, and one of the simplest methods to determine how profitable a franchise or business can be is to look at its profitability during its busiest season.

You will be better able to make business decisions if the seller agrees to provide you access to the company’s records for a few of their franchise locations. You could also wish to look up the largest loss they have ever experienced during their lowest point.

  1. What is the Average Running Cost of the Franchise

Knowing the typical operating costs of the franchise is another important question you should put to a franchise consultant if you want to purchase a business’s franchise.

The fact is that some franchises aren’t as profitable as they claim due to excessive operating expenses. This is because they failed to minimize some unnecessary expenses. This inquiry is crucial, especially if they just have a few franchise locations.

  1. The Terms and Conditions Attached to Buying the Franchise

Please keep in mind that there are almost always restrictions and conditions included in the contract agreement when you purchase a franchise or sign any other type of contract. Some investors are duped by shady business operators who sell them a franchise with ambiguous terms and conditions.

This is why it is crucial to enquire about the terms and conditions related to acquiring and running the franchise. Make sure to carefully review the terms and conditions before deciding whether to buy or not.

  1. Ask if There Are Any Additional Support Available 

Before deciding to purchase the firm, you should also inquire with a franchise consultant about the terms and conditions of buying the franchise. In addition, you should find out whether you will receive any further help if you decide to purchase the franchise.

Some franchisors offer complimentary consulting and support for a limited time. Some will be able to mentor you, suggest a key employee, introduce you to their clients, and even complete the necessary onboarding procedures for their business model.

  1. Will the Franchisor Offer Financial Assistance?

The franchisor might be able to help you with your finance requirements, or at the very least give you referrals for lenders through the U.S. Small Business Administration (SBA).

Item 7 of the FDD details your additional costs, which may include grand opening promotions, business, and operational licenses, equipment, company insurance, and employee pay, in addition to the initial franchise price. Additional recurring expenses could include accounting, legal, and advertising fees.

  1. Ask About the Mode of Payment

The majority of franchisors typically provide flexible payment options to make it simpler for potential customers to purchase their franchises. Some franchise owners, however, would only accept full payment.

Therefore, you should inquire about the method of payment if you do not have the whole amount needed to buy the franchise. Intriguingly, some franchisors may offer you the choice of making payments over time in installments, by issuing checks with a future date on them, or even by taking out loans, among other possibilities.

  1. Ask About the Company’s Profile

It won’t make sense for you to purchase the franchise of a company without first reviewing its profile. Demand for it if it isn’t on the internet.

In actuality, one of the requirements for accessing a firm is the company profile. It will provide you with a hint as to how successful the company is or whether they are capturing a decent amount of the market share in the area where you plan to open the shop.

  1. Ask to Know the Business Tax Status

Asking about the franchise’s tax status is another crucial issue that you must not forget to ask a franchise consultant. If you’re buying a franchise in the United States, you will not want to buy a franchise company that is having tax issues. Even after receiving a response from the franchise consultant or franchisor and viewing the tax certificates, you should proceed to conduct further research to determine the franchising company’s tax status from the Tax Board Office.

  1. How Often Do They Renew Their Permits and Operational License

Businesses must periodically renew their operating licenses and permits both in the United States of America and abroad. Therefore, it won’t be inappropriate to inquire about how frequently franchisees renew their operating licenses and permits.

In fact, you might want to check to see if the operational license and permits are still valid. Before purchasing a franchise, you just need to be aware of what you are getting into.

  1. Will the Franchisor Help in Finding a Good Location?

The franchisor should be aware of the greatest locations that are accessible in a specific area. They can support you in lease negotiations if necessary and aid you in choosing the best location for your franchise.

  1. How Much Liquid Capital Will I Need to Maintain To Cover The Franchise Until It Breaks Even?

Franchisees will undoubtedly require significant operating cash for the first several months at least until the business breaks even. Due to this, it is imperative you know the amount of time it took other franchisees of the company to begin making a profit in order for you to be financially prepared.

  1. What Are the Ongoing Fees? How Do Royalties and Marketing Fees Work?

It is also a good idea to make detailed inquiries about your ongoing financial responsibilities to the franchisor, including whether or not you must pay royalties or other recurring costs like advertising. Keep in mind that managing the financial health of your company depends heavily on having a solid understanding of these fees and how they operate.

  1. How Many Franchises Does the Brand Have?

The most common way to assess a franchisor’s size—but not necessarily their success—is by counting how many units they have.

In all honesty, the franchisees’ level of support is what matters most. While an emerging franchisor might not have sufficient resources, a major franchisor might be too busy to give specific attention. Asking about the franchisees’ success percentage and the causes of failing units would help you better understand this.

  1. The Profile of The Owner, Board Members, and Directors

Before purchasing a franchise, you should also be aware of the background of the franchise owner, the directors, and the board of directors in order to determine whether you can believe all the responses they provide and whether you can put your trust in their honesty.

  1. The Business Model and Philosophy of the Franchising Company

Knowing the business strategy and philosophy of the firm selling the franchise is another crucial question that you must not forget to ask, especially if you can’t discover it in any document that is readily available. Before making a purchase, it’s also a good idea to be aware of the company’s business model and ideology.

You will need to put in work to develop a new business model and philosophy if the franchising company’s business model and philosophy do not fit your values and operating philosophy. This will give you a better understanding of what you are getting into, even though it won’t be enough to stop you from purchasing the franchise.

  1. The Position The Franchise Company Occupies in Their Industry

The majority of businesses that enter the franchising business are often already well-known leaders in their respective fields. This is why, before deciding to purchase a franchise, you must make sure that you are aware of the position the franchising organization holds in its sector.

  1. The Benefits You Stand to Gain When You Buy the Franchise

Every seller who has a product or service up for sale can easily highlight its selling qualities to any prospective buyer, and those are what are known as the advantages of purchasing the firm.

So, if you want to buy a franchise, you should ask the franchise consultant to list the advantages you stand to gain. Who knows, perhaps a list of the advantages will provide you with the extra motivation you require to make a wise business decision.