8 Questions to Ask When Choosing a Franchise

Husband and wife Stroud Homes franchise owners

Many reasons are starting a franchise business is a viable option for entrepreneurs. And, it may be especially appealing for first-time business owners who appreciate proven systems and reliable support when first starting up.

James StroudNowadays, as a proven business model, almost all industries offer franchising opportunities.

There is also the question of should you buy into a franchise or start your own building company?… But how do you decide which one is the best for you?

Even though you’ve already decided that franchising is the path to go down, you still have to find a suitable business that aligns with your long-term interests, core values and budget restraints.

Here are some questions to ask when choosing a franchise.


Is there a strong support system?

The reason why many decide to go down the franchising route is that they are not ready yet to start a business on their own.

Franchising bridges the gap between being an employee and starting your own business from scratch. It allows you to own and run your own business, but with more experienced people behind you.

So, before choosing a franchise ensure the head office team and other franchisees are there to support each other and provide you with the information and training you will need to succeed – after all it’s one of the biggest benefits of the franchising system.


Is training provided?

Franchise training and support sessionNaturally, franchise systems in different industries look different, use different software programs and have a different ethos.

Make sure that the franchise you pick will provide you with training in THEIR way of doing business and are also showing progressive thinking when it comes to their business operations, meaning they update their systems by the market.

A stagnated business model is a failing business model.


What does the franchisor expect of you (and vice versa)?

Buying a franchise is a big commitment. Franchise contracts usually last between 5-20 years, which means it is important that both the franchisors and the franchisees expectations are met during this period.

Most franchisors invite prospects to an interview where things like long-term commitments and expectations are being discussed to ensure it is a mutually good fit.

If you’re not invited to a conversation, initiate one before you signing a contract.


What’s their marketing approach?

Before diving into your new business venture, you should query the franchisor about the marketing and sales approach.

After all, this will play a great role in whether or not your business is successful in the long run. Ask if national and local marketing initiatives are part of your monthly ongoing fees, and if so, what are you getting for the money you pay?

OR is marketing up to each franchise and location and is there training provided? What are the franchisors’ expectation on social media marketing and is it something you will have to manage?

Franchise location grand opening


What are their reviews like?

The best way to find out the quality of anything these days, is to ask the customers.

Reading reviews and testimonials about your intended franchise, from both their clients and other franchisees, is a great way to get a feel for the company’s reputation and company culture.

You can usually find review on a number of online platforms, including Google and Facebook. If the reviews are consistent, you’ll get a sense of the company’s business practices.

It also pays off to speak to current (and even former) franchisees, to answer any questions you may have in relation to the company.


Is the company performing well?

You don’t want to invest in a franchise that is underperforming. Ask to see financial data from the company, their financial model and predictions in the next few years and potentially a Profit and Loss Statement.

Buying into a franchise system is a big financial investment for you so you want to know your odds of getting your money and how long it will take.

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What fees can I expect to pay?

You can expect to pay an upfront fee when buying any franchise, which can vary greatly between $10K-100K depending on the industry and the company.

You can also expect to pay ongoing fees for things like marketing, training, and a percentage of each sale. It’s important to calculate both the initial investment and the ongoing fees against your budget before deciding to go all-in on a franchise.

It may be a good idea to ask your accountant to help you understand what it will take to see returen on investment (ROI) and for you to build some capital.


Will they help with finding and fitting out premises?

If your franchise business will require commercial premises, you should make sure the franchisor can assist you in finding a suitable space.

Without knowledge and experience it can be difficult to find the right premises, however the franchisor ought to know what works for its particular franchise in particular areas.

The quicker you are to find somewhere to operate from, the quicker you can open up shop and start making revenue.


Franchising with Stroud Homes

Doing your research before going into business with any franchise is key to a successful partnership.

If you would like to find out more about the Stroud franchise system, how it works and what’s required to buy a building business & join the Stroud family, read through our Frequently Asked Questions or send us an online enquiry.

We have a number of exclusive franchise territories available around New Zealand.

Please view our current NZ building franchises for sale and if you’re interested in learning more about starting your own building business get in touch today!

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