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6. When Will You Break Even? Based on your investment and
breakeven analyses in
OP, how long before you reach
breakeven point and start making a return on your investment? Do you have financial strategies that will allow you and your business to survive until
breakeven point? What sort of profits might you reasonably expect to make? Franchisors are not required by US law to offer profit projections to their franchisees. However, if they do, they are required to base their projections on concrete research.
7. How are Conflicts Resolved? Is there a Conflict Resolution Policy in place? What do other franchisee's say about
company's approach to addressing conflicts? Under what circumstances can
company terminate your contract? If your contract is terminated, will you lose your investment? When will
contract be up for renewal? Hint: Franchise contracts that are renewed do not necessarily keep
same terms as
original contract. Terms could be less favorable.
8. Will
Franchisor's Advertising Campaign Benefit You? You are required to pay a fee towards
franchisor's advertising campaign. Find out
extent to which this campaign will benefit your outlet. Do you have any control over how
advertising dollars are spent? Can you conduct your own advertising? Do you need permission to do so? Do franchisees benefit from any commissions or rebates that
franchisor receives?
9. What's
History of Failed Outlets? Before investing, find out
number of outlets that have failed. High numbers could indicate systemic problems. Be aware that some franchisors will disguise failed outlets by turning them into company-owned stores. If you are purchasing an existing outlet, be sure to find how many previous operators have operated
service and why they left. Hint: Conduct interviews with people who have recently left or joined
franchise. Be sure to ask if
franchise company is delivering
promised supports and services.

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