Franchise Genius Checklist - Franchisee Research

Franchisee Research Checklist

Note: Talk to as many franchisees as you can to get an accurate picture of the entire system. You should contact franchisees who have been open at least one year and have gone through all seasons. It’s also a good idea to make sure you have talked to at least one of several different types of franchisees:

General Questions for All Franchisees

• How much can I expect to make each year?
• How long after your purchase of this franchise did you become profitable?
• What were your initial costs (how much higher or lower than expected)?
• How debt did you incur to open your store and how much did that cost you?
• Were build-out costs much higher than anticipated? What caused overruns?
• How long did it take you to open after your initial signing?
• Were the working capital figures provided in the UFOC accurate?
• Who is your franchisee support person (by name)?
• How often do you see a corporate representative?
• What is their primary function when you see them (training, compliance, unit growth)?
• How responsive is corporate to your needs? To your suggestions?
• What is the one thing you would change about the system?
• What kind of support did corporate provide for your grand opening?
• What is the best part of being a franchisee in this system?
• What is the worst part of being a franchisee in this system?
• If given the option to do it over, would you purchase this franchise again?

Questions Specifically for Former Franchisees

• Why did you close?
• When did it become apparent that closing was an option?
• What kind of support did you receive?

Questions Specifically for Outlying Markets 

• What is the brand awareness in your area?
• How did brand awareness affect your grand opening?
• How does brand awareness affect your marketing tactics?
• Did you receive extra support due to low store density/awareness in your market?
• Has the company talked about expansion plans in your area? Have they made promises they haven't kept?
• Are there required items that you have difficulty getting due to distribution? Are your cost of good higher due to your remote location?
• How often does a representative visit your location?
• Do you have any special dispensations with regards to marketing fund contribution due to your lack of brand awareness?
• Are you able to organize an advertizing "co-op of one" with matching funds from the marketing fund?

Questions Specifically for FAC Members

• How receptive is corporate to new product ideas?
• How responsive are they to competitive pressures at the unit level?
• Are there any new products or services planned for this year? How are they tested?
• Does the council audit the corporate books or the marketing fund?

Questions Specifically for Multi-Unit Operators

• Do you have a staff member who is shared by all units that would be cost prohibitive for a single unit (catering manager or sales representative, for example)?
• What economies of scale are realized with multiple units that a single unit cannot realize?