So you’ve found a franchise you feel goodabout purchasing. But when it comes down to signing on the dotted line,feelings aren’t good enough. How can you tell if this apparently idealfranchise is really the right one for you?
To test your instincts, answer each of thefollowing 24 questions. If your answer to any of the questions is no, or ifyou’re simply not sure how to answer, further investigation of the franchise isdefinitely a good idea.
1. Does the franchisor have a good trackrecord?
2. Do the principals of the franchise haveindustry expertise?
3. Is the franchisor’s financial conditionstrong?
4. Does the franchisor thoroughly screenits franchisees?
5. Are the franchisor and its franchiseesprofitable?
TheProduct or Service
6. Is there demand for the product orservice?
7. Are industry sales strong?
8. Does the franchise’s product or servicefare well against competitors’ offerings?
9. Is the product or service competitivelypriced?
10. Is there lots of potential for growthin the industry?
The Market Area
11. Are exclusive territories offered?
12. Does the territory you’re consideringhave sales potential?
13. Is the competition strong in this area?
14. Are the other franchises near this areasuccessful?
15. Are the fees and royalties reasonable?
16. Are the renewal, termination andtransfer conditions reasonable?
17. If the franchisor requires you topurchase proprietary inventory, is that inventory useful?
18. If the franchisor requires you to meetannual sales quotas, are those quotas reasonable?
19. Does the franchisor help with siteselection, lease negotiations and store layout?
20. Does the franchisor provide ongoingtraining?
21. Does the franchisor provide financing?
22. Does the franchisor sponsor anadvertising fund to which franchisees contribute?
23. Are the franchisor’s promotionalprograms strong?
24. Does the franchisor have favourable nationalcontracts for goods and services