Questions to Ask Open, Transferred, and Closed Franchisees

General Questions

• How long have you been a franchisee?
• How many do you own?
• Are you happy with the support you have received?
• Are you making what you thought you would?
• How has advertising been?
• How has it been finding employees?
• Are your COGS what you thought they would be?
• Were the range of costs in the FDD to open & operate the first 90 days accurate?
• What kinds of information do you wish would have been shared with you but wasn’t before you signed the agreement?
• If you had to do it all over again, would you?
• What has been your main challenge with the business?
• What has been your main challenge with the franchisor?
• What made you choose this franchise?
• How many hours a week are you working on the business?
• Have you been profitable?
• Have you been able to pay yourself?
• How much competition do you experience in our local market?
• How much time did you devote to daily operations vs. growing the business with marketing, advertising & training?
• Have there been any unexpected costs?

Additional Questions for Transferred Stores/Former Franchises:

• Did you transfer at the end of your term or earlier?
• Did you find the person you transfer to or did the franchisor help you?
  • If you found them, how?
• Was the transfer process easy?  Did the franchisor assist you?
• Did you receive any compensation from the person you transferred it to?
• Why did you ultimately decide to leave the system?

Questions to Ask Closed Franchises:

• Did you close at the end of your term or early?
  • If early, did you have issues with the franchisor for closing early?
• Why did you decide to close?
• How was the closing process?
• What did you do with the physical assets?
• Do you feel the non-compete in the agreement is fair now that you are closed?

Franchise Validation Questions:

Individual Background

• What line of work were you in before?
• Did you consider any other franchises before choosing this one? If so, what made you choose this one versus others?

Initial Period

• What would you say is the biggest mistake a first-year franchise owner can make?
• How are the other franchises in the system?

Support

• How could the franchisor improve?

Franchisor Relationship

• How is your relationship with the franchisor? Has this changed over for better or worse?
• Have you experienced any conflicts with the franchisor? If so, have they been resolved?   
• Do you feel supported by the franchisor? Do you feel they care about you and your success?

The Franchised Business

• What is your current hourly commitment to your business per week?
• How would you describe your role in the business?
• Have you run into any major surprises since joining the franchise system?

Marketing

• How does the franchisor contribute to your marketing efforts?

• Have you added specific, local programs to generate business?
• Are there any competitors in your area? What do you think are the major competitive advantages that set you apart from the competition?

Purchasing Power

• Are you required to purchase from the franchisor or approved suppliers, or do you have the freedom to purchase as you choose?
• Does the franchisor use the collective buying power of the entire franchise to obtain discounts on supplies and/or inventory beyond what the individual franchisees could achieve?
• Are the services that you get worth the fees that you are paying?
• Have you encountered any surprise costs of significant expenses related to the operation of your business?
• Have you been required to pay for things you did not expect or were not prepared for?

Money

• Going in, what were your expectations for annual revenue? Have those expectations been realized?
• How long were you in business before you reached breakeven? Was it what you anticipated?
• What factors impact your annual net profit most?
• Do you have plans to do things differently in the coming year?
• Have you noticed anything specific that separates higher performers than lower performers in your franchise system?

Time Machine

• All things considered, If you had to do it over, would you decide to go into this business again? Why or why not?

Questions About the Franchisor

• Is the franchisor fair and easy to work with?
• Do you know of any trouble the franchisor has had with other franchises, competitors, or the government?

Questions About Costs

• How is your cash flow?
• Were the franchisor’s start-up costs and work capital requirements accurate?
• Were the franchisor’s profit projections and earnings claim accurate?
• How long did it take you to break-even?
• Have you made the profit you expected to make?

Training

• Was the training by the franchisor adequate?
• Was the training by the franchisor effective?

Operations

• Have the operations manuals helped you?
• Are the manuals updated on a regular basis?
• How much freedom do you have to make decisions?
• Are you disappointed in any aspect of the business?
• Is there anything about the business that you do not like?
• What do you like most about the business?
• What do you like least about the business?

Advertising and Marketing

• Are you satisfied with the marketing and promotional assistance the franchisor has provided?

Understand if Former Franchisees Were Successful

• What happened at the end of the franchise agreement?
• If you could go back in time, would you buy your franchise again?

Find Out if Franchisees Feel Supported by the Franchisor

• Does the franchisor respond quickly to your questions?
• Does the franchisor encourage or facilitate communication between franchisees?
• Are you in competition with the franchisor, the franchisor’s other brands of other franchisees?
• Have you had an issue or a dispute with the franchisor and it was resolved to your satisfaction?
• Tell me about the marketing strategy and if you are happy with it?
• Has the franchisor made any changes to the system that has impacted our business?

Learn About the Pro and Cons of the Franchise

• Have you been able to renew your agreement, or do you intend to?

Questions to Ask Former and Current Franchisees

• How long have you been a franchisee of this brand?
• Why did you become a franchisee of this brand?
• Did you have a background in business before you became a franchisee for the first time?
• What is the most important advice that you would give to anyone buying any franchise?
• Has the franchisor kept promises made  to you before you signed up?

Find Out if Current Franchisees are Successful

• Is your cash flow positive or negative? What are the main factors affecting your cash flow?
• What are your costs of goods?
• Does your franchisor require you to pay more for supplies than you think is fair?
• In the next 10 years does the franchisor have plans to grow or sell the franchise system?

Understand if Other Franchisees are Making Money

• Across all franchised businesses, not including corporate stores, what is the highest, lowest and average gross revenue?
• What is the average time it takes for a franchisee to pay off their investment and start making a return? What is the shortest and the longest time across all franchised businesses?
• What capital expenditure is planned during the term of my franchise agreement?

Find Out About the Training and Support

• Does training cover the operations such as how to use a particular machine, as well as general business skills, such as how to manage cash flow?
• What happens if I need extra training or support?
• What are the key performance measures and does the franchisor help me to meet them?