Talk to Franchisees Before You Buy a Franchise
In your investigation of a franchise company your most accurate source of information is going to be the franchise owners. Franchise owners can provide the real story on what your life could look like when you buy a franchise. The franchise disclosure document you received from the company has a section containing the names, addresses and phone numbers of owners at the time the document was printed. In addition, you need to ask the company for a list of all purchasers who have bought since the disclosure was printed.
Occasionally, a franchise company will provide you with a short list they prepare containing certain franchise owners, and will indicate they want you to specifically contact these people. This is sometimes referred to as a singers list, and most of the time it will be comprised of those who will sing the highest praises of the franchise. It’s wise to call these particular individuals, but your horizons need to be expanded well beyond this list. You should plan to speak personally with 20% to 50% of all franchise owners. If you are dealing with a large franchise company, this may seem a dreadful chore, but it’s absolutely essential that you do so. If you are investigating a small company, or new franchise, it’s important to speak with all franchise owners.
Try to balance your inquiries between new franchise owners and those who have been in the system for some time. It may take six months to a year to become a mature franchisee, therefore you may get entirely different answers from each group. Keep in mind two points: (1) There is really no obligation on the part of the franchise owners to speak to you; and (2) They are independent business people with businesses to run… keep your time as brief as possible, and call during normal business hours. Tell them who you are and why you are calling, and ask if there is a better time to speak with them.
What to Ask Before You Buy a Franchise
The answers to the following queries is where all the validation occurs dealing with the key questions: “Does it work?” and “Should I buy it?”.
1) Why did you buy the franchise?
2) How long have you been a member?
3) Do you receive all the support you need?
4) How do you spend most of your time?
5) What’s the most difficult aspect of operating this franchise?
6) Was the initial training you received adequate regarding all aspects of running this business?
7) Is the company always available to answer your questions and give you help?
8) How do you rate your franchise against the competition?
9) Which of your expectations has ownership of this franchise failed to meet?
10) What kind of on-going training and development are you receiving from the franchisor? Is it satisfactory?
11) Is your business generating profits? Are you exceeding your financial expectations? If you had a comparable job in private enterprise as an employee, would you be making as much as you are now?
12) Has it cost you more than you expected to begin or operate this business?
13) Are you following the franchisor’s program to the letter?
14) Are you satisfied with the marketing, advertising, and promotion assistance the company provides you?
15) Knowing what you know now, and if you could do it all over, would you buy the franchise again?
Can you think of other important questions for the franchise owner? If you can, please leave a comment with your question so we can add it to the list. Thanks!
Visiting Franchise Owners
Some franchise prospects invest thousands of dollars to travel all over to visit with existing franchise owners. And, it’s money very well spent. However, time and finances may play a role in how many franchise locations you are able to visit.
Plan to see mostly franchises in market areas similar in size to the one in which you will be operating. If you can, however, visit at least one larger market, and one smaller market. You will find interesting adaptations to the same business format as you go up and down in market size.
Visit only by an appointment! Yes, you can drop in, but use that visit to set up an appointment at the owner’s convenience. In your visit, be observant of what’s going on and ask your questions in a timely manner. It’s going to be exciting to visit these franchises, but remember, you are an interruption!
You Will Meet All Kinds of Owners
The time spent with franchisees is extremely worthwhile to your investigation. As you proceed, you may wish to adjust your questions or adopt new ones based on the feedback you are receiving. Be prepared, you may find happy as well as unhappy franchise owners (it would be very unusual to have a roomful of people with the same interests and have them all agree on everything!). If you sense you are speaking with a disgruntled owner, ask tactfully what they feel specifically is wrong. Once you have contacted a large percentage of owners, you’ll have a lot of notes to compare; if you sense negative trends, it is sufficient reason to raise a relevant question with the franchisor. Under no conditions whatsoever should you reveal any clues that could link franchisees with negative comments. The information you obtained from franchise owners was offered to you in the strictest confidence.
The 15 questions that have been developed for you to ask franchise owners are all important. In addition to these, develop your own relevant questions that will provide you with what you need to know. You may have to really “dig” for your answers… be persistent. Find out!