3 Critical Questions That Should Influence Your Franchise Purchase
When considering investing in a franchise opportunity, it’s critical to conduct due diligence to ensure that you’re making the right decision. During your interview with the franchisor, asking the following three questions can help shed light on whether you’ve found the ideal franchise partner or need to keep looking.
How do you choose franchisees?
Different franchise companies have different criteria for selecting franchisees. Some fashion franchise opportunities, for instance, are only available for people with qualifications and traits suited to the fashion industry. It’s important to find out what criteria the franchisor you’re thinking of partnering with uses, so you know from the outset whether you qualify to fit within the system or not.
What makes you different from the competition?
If you’re going to invest hundreds of thousands of dollars into a business advisors franchise, for example, it’s essential that you put that money into the right brand. Ask your potential franchisor regarding their unique selling points. If their market is saturated and highly competitive, you might want to think twice before making any commitments. Your money is much safer when invested in an innovative and unique brand.
How financially strong are you?
The whole point of investing in a franchise is to take advantage of a successful business model. The financial position of the franchisor can best prove that success. Take a look at their latest financial statements and ask about their growth plans. Find out the source of the bulk of the franchise company’s income, and how much money is designated to the system.
Buying a franchise is an important financial decision that needs to be approached with a lot of diligence. By asking your franchisor a series of relevant questions, you can safeguard yourself against making the wrong investment choices.