Ask the franchisors

How much money can I make? +

Franchising is regulated by the Federal Trade Commission (FTC) and the Attorney General’s office in some states. They are not permitted to make financial earnings claims. However, you can ask if they have an Item 19 in their FDD, Franchise Disclosure Document.

What programs will be implemented to keep the brand current? +

Whether it’s an emerging brand with a hot new concept or an older brand that’s become a household name, the market, and consumer’s needs are always changing. The new programs should be well-tested and consistent with the franchise’s core competency. What R & D resources are in place to deliver new ideas, services, and products? Does the franchisor seek new ideas from existing franchise operators in the field? The Egg McMuffin was conceived by a franchisee.

What happens if I want to sell my franchise or leave the system? +

Most franchise agreements stay in effect for 5, 10 or 15 years. This means that the franchisor can’t change the terms you’ve agreed to in the franchise agreement…you’re grandfathered into the current royalty, ad fund, and territory size. This is protection for you! So when you’re ready to exit, Item 17 comes into play. Be sure to read this over and have a discussion about this.

Do you have a local and national ad fund? +

Many franchises will answer yes. However, emerging brands typically have the provision written into the franchise agreement but may not implement the fund until they have enough franchisees to merit it.

How many dedicated field support personnel are there compared to the number of franchise locations? +

This is a hidden fact but vital if you are to get adequate support. If the brand is rapidly expanding and awarding many new franchises, do they have an operational infrastructure in place to train and support them? Growth is needed, but it must be balanced with a strong support organization.