Franchising - Start-up Support Given/Received

Answered by:

Aaron Bakken

Highly recommended
Aaron Bakken - The Franchise Consulting Company
2 Questions answered
Answered on September 25th, 2020

Most franchisors cannot take any responsibility for helping a franchisee project their financials/sales forecasts for basic liability reasons. They can, however, provide templates for pro-formas that are relevant to their business structure. It's helpful to talk with existing franchisees and reviewing the Franchise Disclosure Document's item 19 for some basic metrics (keeping in mind that a franchisor's FDD will provide financials for a high performing location - so those numbers could very well be higher that what you can attain at your location). 

Some franchise companies do offer referrals to preferred lenders - those that already understand their business model and are comfortable providing financing for new franchisees. Also, there are a limited number of franchise companies that can offer in-house financing, but their interest rates and payback time periods are often not as good as the general lending market.

From a systems and operational perspective, all franchises should be providing their franchisees with a solid operating procedures manual along with guidance from regional advisors, that can include onsite help during the grand opening process. After all, that's what you are paying them for.

When evaluating a franchise investment, ask a lot of questions about start-up guidance and support and how they continue to earn their royalty payments after you have opened. It's a two way street - you pay them, they need to help you. If you don't like the answers you are getting, find another franchise opportunity.


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