• • • FRANCHISE TIP • • •
Interview the Franchisor: 2
- Ask what the pretax net profits of existing operations are and compare them against the earnings statement or pro forma that the franchisor has already supplied you.
- Find out what is included in the training program, field assistance, store design, facility construction, site selection, and feasibility studies.
- Will there be any additional working capital required after the initial fee and investment, and if so, how much?
- How will the franchisor arrange for the supply of product to the business? Ask to see a current price sheet.
- Ask the franchisor to detail exactly what the territorial restrictions and protections are.
- Find out how many franchises have been sold to investors in the state you will be operating in during the last 12 months, and how many have opened a franchised business in that time.
- Ask if the company has any plans for further expansion in the state. Has it identified any locations it plans to develop?
- If purchasing a current franchise, ask to see the operating books and records of the business for the past two years.
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