alt
alt
Home / Franchise Articles / Top 5 Things to Consider Before Investing in a Franchise

Top 5 Things to Consider Before Investing in a Franchise

16 Nov 2017 1462 Views

By: Omar Al-Haza'a - Founder & CEO, Franchise Arabia 

1. Success vs. failure history – Ask the franchisor: what’s the success rate of your franchisees? Find out how many units have closed over the past 3-5 years and the underlying reasons for failure. You also need to know if the franchisor has a history of litigation.

2. Financial statements – A franchisor isn’t required to disclose information about revenue or sales. However, a good franchisor will provide figures or net profits of one or more of its existing units. Ask if you can personally discuss the figures with the franchisees.

3. Training & support – How much training & support will you get? Does it cost extra money? A good franchisor will provide initial training, grand opening support, ongoing support, marketing, technology, and product & service training.

4. Fees & cost structure - Determine how much fees you’ll end up paying. You will pay some or all of the following: initial fees, royalty fees, marketing fees, penalty fees, equipment and food costs, and maybe some other hidden fees & costs!

5. Visit existing franchisees – Find out what current franchisees have to say about the brand, ask about pros & cons. You may also want to visit those unhappy franchisees, if any.