Questions Entrepreneurs Should Ask Franchisors in 2023

In 2022, franchising continued to be a popular option for entrepreneurs looking to establish their own businesses. According to Statista, in 2022, it was estimated that there would be almost 792,000 franchise establishments in the United States with an economic output of roughly $827 billion. The number of employees totaled almost 8.5 million people. That same report stated that the largest segment of franchising is the quick service restaurants with business services coming in second.

With more franchising options becoming available and more potential franchisees entering the industry, it is important to make sure you pick the right franchise for you. When looking back at 2022, there were various issues that potential franchisees were focused on when determining which franchise was right for them. Those include the stability of the franchisor, existing franchisee performance in 2022 and funding.

Cultural fit also played an important role in 2022. With uncertainty in the market, inflation, interest rates, political unrest, and a multitude of other issues, the cultural fit between the potential franchisee and the franchisor was critical. Candidates wanted to feel comfortable with the culture of the leadership team, communication, collaboration and the support they received. In addition, entrepreneurs also wanted to see how successfully the franchisor navigated the pandemic.

Looking ahead to this year, it’s vital for potential franchise owners to take note of trends within the industry. With COVID and social issues being a continued focal point, there remains a multitude of questions entrepreneurs should ask before acquiring a franchise – from cultural fit to financials.

The COVID Effect

While the world inches further and further away from the outbreak of the COVID-19 pandemic, the business environment is still seeing the lingering effects. When it comes to choosing a franchise in 2023, entrepreneurs need to pay attention to how franchisees performed in 2022 as opposed to 2021. Are the franchise owners on par or exceeding pre-COVID sales or are they still trying to recover? The answer is a clear indication of the support the franchisor is providing its franchisees. If franchisees are still struggling, that could be a red flag for entrepreneurs looking to buy the franchise.

A franchisor’s support staff should also be considered in 2023. Whether or not the franchise has increased or decreased support staff over the past two to three years is critical. For example, if a franchisor had reduced its corporate staff during the pandemic and has not replenished it, it is probably a red flag. On the other hand, if the franchise has increased support staff, it can be indicative of growth despite the pandemic.

Staff and Retention

One of the ongoing challenges for small businesses in the United States today is getting and retaining quality employees. For entrepreneurs, this is a great opportunity to ask franchisors how they are helping franchisees with staffing. If franchisees within the franchise system are fully staffed, it can showcase the franchisor’s dedication to its franchise owners. Franchisors can contribute to this by building a positive franchise culture, providing ample franchise support and creating competitive benefits for employees.

Technology Advantages

In 2023, technology remains an emphasis for any business. With customers looking for quick access to services, a company’s technology stack can provide a great advantage to potential franchisees. When asking about a franchise’s support system, entrepreneurs need to make it a point to ask about its technology. You want to align with a franchisor that allows you as a franchisee to efficiently and effectively operate your franchise. If you can do that through the franchisor’s technology platform, then there are numerous benefits, including operating a more profitable franchise.

Be Direct

While we have discussed several questions you should consider before acquiring a franchise in 2023, it’s just as important to be able to have transparency.  When evaluating a potential franchise, you should be honest and direct. At PostNet, we treat this partnership like a long-term relationship or marriage. If you’re not honest and direct and don’t have the support and understanding from both parties, then the marriage is going to fail.  Do your homework, feel comfortable with the answers to your questions and you’ll set the basis for a long-term business relationship.

Bill McPherson is the vice president of franchise development for PostNet, a global leader in high-quality printing and shipping solutions, and AlphaGraphics, a leading franchisor of printing and marketing solutions. With over 29 years of franchise leadership, he has led franchise development and real estate for B2B, B2C, retail, and in-home senior care concepts.

For more information on PostNet, please visit: https://www.postnet.com/.