There are a variety of SBA loans that are available to...
Some prospective franchisees admit they do not know what to ask existing franchisees, and others say they know what they’d like to ask, but they don’t know how!
Don’t let either situation stop you from thoroughly investigating a franchise opportunity. Here are 4+ questions to ask, worded in a way to help you get the information you need.
Question #1 -- “As an existing franchisee, knowing what you now know, would you buy this same franchise again?”
Some experts will tell you never to ask Yes/No questions, but in this case you must because you want a definitive answer. If you ask 10 franchisees of the same brand that same question you want to add up the “yeses” and “nos” at the end of your interrogation and decide if this is a franchise you should buy. If the majority of existing franchisees tell you “no,” then you probably need to look for another opportunity. There could be exceptions, but you’ll want to understand what they are before you go ahead.
The answers to Question #1 logically lead to other questions. Whether the franchisee says yes or no, ask: “Why” If the franchisee answers no, ask “Under what circumstances would you change your answer to a yes?”
Question #2 -- “Do you find the business as satisfying today as you did when you first got started?”
Satisfaction is an important consideration in the life of a franchisee. In fact, many people explore franchise opportunities to get away from an unsatisfying job. But in this case, you’ll pay a fee to go to work. Do you really want to work at something that you don’t find satisfying after a year or two?
It’s another Yes/No question, but again the answers lead to other questions: “What happened to change your degree of satisfaction?” . . . “What could you or the franchisor do to make the business more satisfying?”
Question #3 -- “What’s the secret to the success of the top franchisees?”
It’s an open-ended question that can reveal important facts for you to consider. For example, if the franchisee answers, “Location!” you need to zero in on where to open your franchise. If the answer is “sales skills” or “management skills” or “accounting skills” you need to evaluate your own skills, or your ability to hire those skills.
Of course, if you’re not questioning a top franchisee, you may get the wrong answer! That’s why you should always ask the franchisor to give you a list of the top performing franchisees, i.e. the franchisees who won awards at the last three annual conventions. (A franchisor that won’t do that or can’t do that may not be worthy of your consideration).
Question #4 -- “If I invest the money the way the franchisor suggests (i.e. in training, advertising, location, etc.) and I work the business as well as you have, how much money can I expect to earn my first year as a franchisee? The third year? The fifth year?”
That’s what you really want to know, isn’t it? “How much money will I make?” The franchisor probably won’t tell you, but the franchisees will if you ask in a non-invasive manner. If you’re expecting to earn six figures annually, but no franchisee ever has with this brand, you need to know that upfront. It may mean you’ll have to buy more than one unit to meet your financial goals.
While these are some of the questions you should ask existing franchisees, you’ll find more in this book: 101 Questions to Ask Before You Invest in a Franchise by Dr. John Hayes.