Questions to Ask a Franchisor Before Buying a Franchise in the Philippines
When considering a franchise business in the Philippines, it is important to understand every aspect of the potential business franchise. Franchisers expect the franchisee to ask a lot of questions. Before calling them, first obtain a clear understanding of the franchiser's business and how much of a financial investment is required. After which, prepare the questions for the prospective franchisers, call them for initial inquiries, then schedule appointments accordingly.
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How long has the franchise been in operation?
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This question establishes the track record and history of the franchise. It enables the franchisee to know the franchiser's business experience and the credibility of its officers and directors. A follow-up question to this is asking how many franchisees currently do business with the franchise in the Philippines, and possibly abroad. Moreover, ask how many franchisees have left the system already. The information obtained can provide an overview of the franchise's stability, a better understanding of how the franchise system works in this specific type of business and how other franchisees in the same system are doing. All these also allow you to assess if your type of experience, your intended business location and your interests are in line with what the prospective franchise offers.
Get a solid background of the franchise by getting statistics and viewing graphs of how it has grown throughout time. The growth trend seen relative to the current economic condition of the Philippines may either indicate the future earnings and profitability of the franchise or its dipping viability in the marketplace.
How much would it cost to become a franchisee?
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The financial aspect is crucial to your own business plan and the investment needed as a franchisee. The franchise fees represent a significant cost of doing business including the initial franchising fee and the regular fees which could be paid either on a monthly, quarterly or annual basis. These regular fees must be paid to keep the right to operate the business and may include other possible expenses for products, services and supplies that must be purchased from the franchiser or its suppliers. Get all the information about these costs and establish if there are any hidden fees such as marketing and training fees.
Understand the work flow of how the legal aspects of the business work including the tax registration and collection at the Bureau of Internal Revenue (BIR) and the other financial requirements crucial in the operation of the business and the hiring of employees. Confirm how the business license and fire and sanitary permits should be acquired from the local government unit in which you intend to establish your franchise business. Tax rates and other specific requirements vary slightly in each city or municipality. Some franchises provide assistance with the registrations and permits; while others may still require the franchisee to do these tasks.
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What are the rights and responsibilities of a franchisee?
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Know your rights and responsibilities as a franchisee. It's ideal to get copies of important documents and informational materials before personally discussing things with the franchiser. This initial preparation allows the franchisee to organize all the concerns in advance of meeting with the franchiser and establishes whether or not the terms are amenable to the business endeavor.
Know the terms and conditions under which the franchise relationship gets terminated and renewed. Establish an understanding of the kind of support and resources available from the the franchiser. Quality franchisers provide franchisees with start-up resources and guide kits, and some even provide consultations, trainings, seminars and workshops to ensure that the franchisee is fully equipped in starting the business under its franchise.
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References
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