So how do you know whether the franchise is any good?

We have developed some threshold questions that a business buyer should ask before making a final decision to purchase.

How long has the franchisor been in business?

This is important because if the franchisor has been around for four years or more there is strong evidence that there is commitment and that most of the teething problems have been overcome by then.

How many franchise outlets does the company have?

We like to see at least 10. Again, this is a sign of maturity and achievement.

Are the other franchisees happy?

A franchisor should allow a prospective purchaser, at the appropriate time, to interview other franchisees. A prospect should find that the franchisees are generally happy with the franchise and the franchisor.

Does the franchise carry accreditation with banks?

The major banks are keen to lend on the purchase of a solid franchise. The banks have their own rating system. Such accreditation is a good sign for a franchise.

Does the franchisor, as well as providing operational systems, provide
adequate marketing systems?

Too often a franchisor equips the franchisee with the necessary business model but fails to assist the franchisee to gain customers. A buyer should ask the franchisor where the customers are going to come from, what role the franchisor will play in getting those customers and what other marketing assistance will be available.

Is it too easy to buy a franchise?

Franchisees often ask a lot of questions yet don't find as many questions coming back from the franchisor. If the franchisor looks too keen to sign you up, step back and maybe look for a franchisor who is harder to buy from.

All in all, keep your eyes open, ask questions and be fully satisfied that the franchise you're buying and the franchise system you're buying into is viable and will still be around in ten years time.