What Homework Franchisees Should Do Before Interviewing With a Franchisor?
Besides asking questions about one another’s backgrounds and how a typical day at a franchise looks like, what else needs to happen during the interview? There are some other topics which may be discussed. There are some ways by which you can come across as competent and ready to buy the franchise and take on a role of a lifetime. The present blog provides you with some areas of due diligence you can prepare for outside of the questions and answers
- Understanding of Challenges in the Present Industry:
You should have invested well about the industry in which you want to invest for the franchise. You may also have experience working in it, or a passion for its offerings and services. Besides considering all the good things, you also should be familiar with the challenges faced by franchise partners and in the industry in general. For instance, let’s take a bakery franchise brand as an example. A reputed brand name with high footfall and wide consumer base that has carved out a space in the bakery sector, also faces challenges like shift in the tastes of consumers. Food trends and even health issues can lead to less of a demand for the product which can prove to present issues to a franchise partner seeking to invest in a franchise. It’s fine if you do not have an immediate answer to the question as to how you can address potential issues and problems, however you should be able to be well-versed in the industry’s existing challenges.
- Analysing Financial Situation:
Several entrepreneurs start their own business based on an original product or service they can offer the public that fulfills their needs and meet their expectations. As such, there are many avenues of funding available for them like venture capital or grants. When it comes to finding finances options, franchises operate a little differently, so it’s a good idea to look at your finances and see if you have more than the bare minimum to cover the business expenses. You should endeavour to double your numbers before interviewing with the franchisor. The FDD states that most franchisors calculate three months’ worth of expenses, but entrepreneurship is always risky and prone to unprecedented costs. So better aim for six months.
- Meet with Current Franchisees:
You definitely should have the contact information for current and former franchisees. You muat try contacting both types and see if you can meet and talk together. By asking questions to current franchise partners, you will get a better idea of what being in the business is like and their overall level of satisfaction in working with the franchisor. You should always keep in mind that previous owners might not be able to speak with you if they signed a confidentiality agreement. However, if they didn’t, you may mostly be able to explore more thorough a frank discussion together as to why they left and any issues they had with their franchise.
- Consult a Legal Professional:
It cannot be legally told you what is the best decision to make as a franchise owner. Although and even if you feel sorted with all of the research you’ve donw and meetings you’ve had, it’s always a good idea to work alongside a legal professional before signing the dotted line of agreement. They can help you with numerous questions that you may have and assist you make sense of any other concerns.
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