How Financially Strong is Your Franchise Company?

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6. What are the Ongoing Royalty Costs and/or Franchise Fees? How Do Your Royalties and Marketing Fees Work?
While there are many benefits to being part of a franchise, it often also means you have ongoing financial obligations to the franchisor. Ask if you will be obligated to pay royalties or other fees, like advertising fees and marketing costs, to the corporation. It's important to have a clear idea of your ongoing costs so you can budget accordingly.

7.
The franchisor's financial statements should be included in your copy of the FDD. However, you should still discuss it with the franchisor representative so you have a clear idea of the company's financial health. Ask the representative to explain how they have garnered steady growth, and what their projected financial growth is.

It's also worthwhile to check where the bulk of the income comes from, whether india phone number list royalties or the sale of franchises. Remember, asking these questions is important so you can establish your own financial security.

8. How Much Money Can I Make, Roughly?
It's impossible to know exactly how much money you'll earn as much of that is up to you and whether you run a successful business. But, they should still have a good idea about what a typical franchise owner earns. This will give you an idea of your income potential.

9. How Many Other Locations Are There? What is Your Success Rate?
The success rate for a franchise is not just dictated by how many locations they have. Rather, the amount of support and resources offered to franchisees is a far better indication of whom you'll be getting into business with. Sometimes, a large franchisor may seem more impressive—but be spread too thin when it comes to offering support—whereas a smaller operation might be more invested in the success of its franchise locations.

10. What Sets You Apart from Your Competitors?
Some franchise markets are highly competitive, such as food franchises. Others are more unique or focused on a specific target market. Ask about the level of competition for the franchise in question. Who are their top competitors? What are their unique selling points? What advantages do they offer compared to the competition?

11. What Support Do You Offer Beyond the Initial Training?
It's important that you feel supported by your franchisor. After all, starting a business—on your own or as part of a chain—is a big commitment. This is especially the case if you're transitioning out of your current industry or have little business experience. While most franchisors offer initial training to get your business started, you should check to see if there is ongoing support available. This could take the form of:

Support staff available to you daily
Opportunities for additional training
Professional development opportunities
On-site assistance
12. How Do You Resolve Disagreements or Disputes?
While you naturally will hope a dispute will never happen, there is still always a chance that it might. Information regarding legal action involving the franchisor will be included in the FDD, but it's still wise to discuss the implications. For instance, numerous claims against the parent company could indicate they have a history of going back on the franchise agreement.

You should also protect yourself. Ask how disputes are usually handled, and for details about how your agreement could be terminated if you fail to uphold the franchise contract.