Publications > Franchising
Checklist – Buying a Franchise
Frequently Asked Questions
What is in a Franchise Agreement?
Fixed Price Packages for Franchisees
Questions to Ask the Franchisor
Questions to ask the Franchisor
- How long has the franchise been in existence?
- Are there any franchisor owned outlets?
- If this is a new system – did the franchisor run a pilot operating before franchising the business? How successful was that?
- Is the Franchisor a member of the Franchise Association of New Zealand Inc.?
- What is the total estimated cost of starting the business including working capital?
- Does the franchisor give any assistance with obtaining finance? Does it have any special arrangements with any banks?
- What is the time frame from signing the agreement to starting the business?
- Are there any projections available? If so, what assumptions are they based on?
- What interest does the franchisor have in any premises which are leased? Does the franchisor take a head lease and sublease to you?
- What initial training will be given? Is there a separate fee for this? What topics are covered? What hands on training will you be given? Who can attend the initial training? Is there an extra charge for attendances by other staff members? What extra costs apply – e.g travel, accommodation…
- What support will the Franchisor give you in starting your business? For instance advertising, on site training, finding a site, employing staff… Do you have a launch package for new franchises?
- What makes the product or service special as compared with the similar products and services offered by other franchisors?
- What products must be purchased from/ through the franchisor?
- Describe the market for the product/ services. At what stage is it at – developing, stagnating or in decline. What steps has the franchisor taken to grow the market?
- Is there a research/ development programme to keep up to date with trends and changing markets?
- What advertising campaigns are undertaken? Will you have any obligations in respect of contributions to advertising contributions notwithstanding payment of any marketing/ advertising fee? What advertising does the Franchisor undertake in your area?
- What help will you receive if you want to conduct your own advertising?
- Will you get to see a statement of income and expenditure in respect of any advertising fund? If yes how often?
- What special arrangements does the Franchisor have in place with suppliers?
- Does the Franchisor have any special arrangements in place with insurers?
- How will you create/ get leads? What support does the Franchisor give in this?
- What ongoing support will be provided by the Franchisor e.g. regular visits to the premises – is there a programme of franchisee support in place?? How many people does the Franchisor employ in franchise support roles? What do their roles entail?
- What reports will I get from the Franchisor? – e.g. comparative sales reports from other franchisees. How will I know how well I am doing compared with other franchisees?
- What meetings and conferences will you be required to attend? What is the likely cost of these?
- What is the 5 and 10 year plan for the system? What plans does the Franchisor have to improve the system?
- What happens at the end of the term of the franchise agreement and there are no more rights of renewal?
- Can you review the Manual?
- Will the Franchisor supply a list of franchisees so that you can contact them?
- What process is in place for dealing with complaints from franchisees?
- Who are the current competitors?
- What help does the franchisor give you to sell your franchise?
- What commitment is required by you to run the franchise business successfully? What sort of hours should I expect to put in – including time for admin requirements?