The franchise’s Discovery day is an important event you need to prepare for as you proceed on your business ownership journey. This is the day you will meet face-to-face with the franchisor, usually at their corporate office. The aim of this meeting is to show and tell you why you should join their franchise system and to ensure that you are a great match for the franchise brand in terms of experience, knowledge, mindset, and culture.
It is important to come up with a list of questions you would like to ask during this meeting before a franchise’s Discovery day.
You will know most of the important questions to ask your potential franchise after reading the franchise disclosure document. For example, if the franchise company is facing a lawsuit, you might want to ask about it. If the franchisor has a high franchise failure rate, you might also ask about them. If the franchisor has filed for bankruptcy in the past—ask.
To help you get started, we have compiled below a list of questions you need to ask your would-be franchisor. These questions are meant to help you begin your franchise investigation, so don’t consider them as an exhaustive list.
1. Who are your direct competitors, especially those who are operating in my area? How are you going to handle them based on your market analysis?
2. What changes are you about to make to this franchise concept? Operations? Marketing?
3. What plans do you have to deal with the competitive threat from your current competitors? Future competitors?
4. Can you tell me the biggest competitive threat present in the market? What is the biggest opportunity out there? You need to take note of the response you get here. If the answer you receive is not good enough, it is possible that you are being sold or that the person you are directing the question to doesn’t know the answer. Whatever the case may be, beware.
5. Who are the end users of your products or services? What’s occurring to this market?
6. What are you actually offering? (For instance, Subway primarily sells sandwiches. But it is offering value, service, and quality delivered pretty quickly)
7. What’s occurred to the market in the last couple of years? To your slice of the market pie? To your tactics? What new competitors have come up and why?
8. Who are your main vendors? Do they offer terms on the initial inventory? If yes, what terms? What terms do your vendors offer on recurring purchases?
9. What is your franchise company doing to help franchisees get the best prices on products? Do you also negotiate pricing with equipment and service vendors (such as office equipment, insurance, and so on?
10. How much money do you invest in research and business development? What percentage of your revenues goes into that?
11. What do you aim to achieve with your advertising? Which advertising do you use? Why did you pick them over the others?
12. Do you intend to sell the business in five years’ time?
13. How do you picture the company within the next five years? Do you plan to make any significant strategic changes to the business concept? Are your franchisees planning to sell their unit or bestow it to their children?
14. What big changes have the chief executive officer made since he assumed the position (or, say, within the last three years)? How does this fit into your overall strategy?
15. How are you trying to stand out in the franchise marketplace?
16. Are you planning any big changes to your management team?
17. What kind of support do you give franchisees to help them generate profits within their first 6-12 months of starting operation?
18. How do you gather best business practices and share them with franchisees under you?
19. What key performance indicators (KPIs) do the franchise owners get from you? How is the information shared?
20. Why don’t you use an FPR (financial performance representation)? That if they are not using it.
21. One of your franchisees told me XXXX. What can you say about that?
22. What is the biggest mishap that has occurred to your franchise? Why did it happen? What have you put in place to avoid a repeat?
23. What good thing can you say about each of your rivals? What are their strongest and weakest points?
