Emerging trends in franchising
As we reflect on another year, let's consider the...
You may have a million questions when faced with the prospect of signing on the dotted line. It's important to take stock, read the Franchise Agreement fully, and consult trusted experts before you proceed. There are some questions you should ask if they have not already been covered because they may influence your decision and help you pave your path to success.
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1. What is the success rate of existing franchises? Understanding how other franchisees are faring can help you determine your likelihood of success. Ask the franchisor which factors they believe influence this success rate.
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2. Are there any trademark disputes pending? You want a completely transparent relationship with your franchisor, and this question will open up discussions about patent protection, expectations and dispute management.
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3. What is the total investment cost required to join the franchise? The franchise fee and royalties will be detailed in the franchise agreement, but there may be other costs you will be bound to, and you need to understand them in detail.
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4. Are there any restrictions on selling the products and services? You need to understand your remit fully before committing to a franchise. Selling restrictions may limit your ability to make a profit, while falling foul of restrictions could land you in legal and financial trouble.
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5. What kind of help will I receive? You will want a supportive environment to develop your skills, especially if you are new to self-employment. If you think you will need help in a particular area, make sure it can be provided and check whether you need to pay for it.
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6. Who will advertise the business? Check whether the franchisor will take the lead on marketing your new location, or whether you will be expected to create and fund ads. If it's up to you, check whether marketing material will be provided; if not, ask what the process is to have your designs approved.
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7. Is there a defined dispute resolution strategy? If you were to have a disagreement with the franchisor, how would you go about resolving it? Following a defined process increases the likelihood of a successful outcome.
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8. How can you exit the business? If you wish to end the contract before its stated expiration date for some reason, is there a method for doing so? What process would you need to follow? Check whether you would be allowed to sublet or sell the business.
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9. Who is the business's main competitor? You will be able to identify competing businesses in the sector, but knowing who the main competitor is will allow you to consider whether your location is ripe for investment or unlikely to succeed.
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10. How quickly can I become established? Your franchisor should be able to give you a rough estimate of how long it will take from signing the Franchise Agreement to being operational. However, keep in mind that there is no guarantee that your case will be the same as anyone else's; timelines may vary depending on your personal circumstances.
