Acquiring a franchise is a huge investment of time and money, yet disturbingly many people buy into it on a whim. Normally, it is not enough to just “like” a store’s product, but in most cases that becomes the total extent of research franchisees put into the franchisor’s company.
If you’re aiming for a soft pretzel franchise, a smart way to get into the business is to ask a lot of questions. Here are questions that need answers to make sure you get a realistic picture of how it is to be a franchise owner.
What’s the turnover rate?
One branch may look successful from the outside, but you have to look at the bigger picture to see how profitable this investment could be. Check the franchise system’s Franchise Disclosure Document to know how many units have already changed managements in the past year. If there are numerous buy-backs from the franchisor, it could be a sign of trouble.
Are the franchisees satisfied with the franchisor’s system?
Find out what franchisees have to say about the franchisor, whether they are satisfied. Some franchise owners vent their frustrations online, so you may learn valuable insights from there. You can also check associations for grumblings of discontent from unit owners.
How are conflicts resolved?
If there is a disagreement on a procedure or policy, how is the problem going to be resolved? Does the franchisor value unit-level innovation? Before diving into this business, be sure that your entrepreneurial creativity matches their brand.
Being a franchisee could be your ticket to financial wealth and freedom. However, you can’t deny that it is one of those situations where the things you don’t know can lead to your business’s failure and hurt you financially.