19 Questions To Answer Before You Buy A Franchise

investing a franchise
Photo by Raw Pixel on Stocksnap

Franchise businesses are booming. Franchises for almost every imaginable type of business are being offered than ever before. Some franchises are great while others are nearly rip-offs that entrap an individual into paying more than 10 times the real worth of the business concept, equipment, or anything they want you to buy.

1. Has your lawyer studied the franchise agreement completely and discussed it with you?

2. Do you both agree with the contract without reservations?

3. Does the franchise need you to take any actions that are illegal or questionable in your state or country?

4. Does the franchise offer you an exclusivity in your territory for the franchise period?

5. Is the franchisor linked with any other franchise company managing a similar business?

6. If the franchisor is linked with another franchise company managing a similar business, what is your security against the other franchising company?

7. Under what scenarios can you terminate the franchise agreement?

8. What will it cost you if you were to terminate the franchise agreement?

9. Will you be compensated if you were to sell off your franchise business?

10. How long has the franchise company been in operation?

11. What is the reputation of this franchise company among its franchisees?

12. Has the franchisor revealed any figures about specific net profits of its members?

13. Have you personally verified the figures with those members?

14. What kind of assistance can the franchisor provide you?

15. Is the franchise company sufficiently funded to perform its duties?

16. Does the franchisor have in-depth training in management?

17. What is it that the franchisor can do for you that you can not do for yourself?

18. Has the franchisor investigated you thoroughly to ensure that you are able to make a profit for the both of you?

19. How much time and capital will you require to buy the franchise and operate it until your business starts to profit?

Prior to investing into a franchise, you must investigate everything thoroughly. If you can satisfy all of these questions, you are probably looking at a good franchise deal. But if you are in doubt, make sure to do your due diligence prior to investing.