20 Questions for a Franchise Buyer for Successful Franchise Investment

Franchise Buyer

As a franchise buyer, how do you prepare for Discovery Day or the day you first meet your franchisor? Most of the time, the face-to-face meeting happens at the headquarter, a place you are not familiar with, which adds to little nervousness. Not always, though, if you are a smart buyer. 

At this meeting, you discuss with the franchisor everything about their business, the growth opportunities, the cost, any existing litigation and various other factors. Remember, this is not another job interview where you answer questions without asking any or by getting too intimidated by the flash and glow of everything.

So, for Discovery Day, we’ve got you 20 questions that you must check with your franchisor on the first day of the meeting.

  1. Competitor Check: Find out from the horse’s mouth brands they consider competitors both in the local and global market.  
  2. Expected Changes: Should you expect any massive change in the horizon related to Concept, Marketing, Operations, etc.?
  3. Market Preparedness: What plan does a franchisor have to counter any ruling or potential competitor? 
  4. End Audience: Enquire about various end-user categories that the business is useful to with sustainable ROI.
  5. Primary Product: McDonald’s sells hamburgers worldwide, but they have their eyes on developing McDonald’s in real estate. 
  6. Market Analysis: Ask for a comprehensive analysis of the market experienced in the last five years. 
  7. Vendor Management: Find out about vendors, terms on initial inventory, types of terms and terms for ongoing purchases.
  8. Price Negotiation: Typically, the source of income is the product, but knowing how to check maverick expenses is crucial. 
  9. Research & Development: What is the benchmark investment in research and development?
  10. Marketing Objectives: How is the franchisor getting the message out? What are their marketing strategy and ad budget, and revenue? 
  11. Five-Year Sales Goal: Check with your franchisor if they have five-year financial budgeting for unit-wide success. 
  12. Five-Year Company Vision: This cannot be left unchecked. Should your franchisor sell off the business in 5 years or pass it on to heirs? 
  13. Franchise Support: Check with your franchise seller what support they offer to buyers and help them recover the investment. 
  14. Supply Chain: As a responsible entrepreneur, do not overlook the importance of supply chain transparency. Ask. 
  15. Performance Evaluation: What your franchisee considers key performance indicators (KPIs) to evaluate performance.
  16. Compliance: Is your franchise seller compliant with Franchise Disclosure Document (FDD). If not, why? If yes.
  17. Finance: Financial Performance Representation (FPR) is the document to ask how all past franchisees like you performed.
  18. Business Failures: All success and failure make a story unconvincing. Find out prior and potential failures so you can avoid them.
  19. Strengths & Weaknesses: To play smart in the market, know the strengths & weaknesses of the brand you buy and market competitors.
  20. Culture: As a franchise buyer, check what is the culture like? Is your franchisor seller ready to accept criticism, review new propositions, resistance management, etc.?
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