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I want to know more about this franchise company than what is on their website so now what

Written by: Mike Callahan

Article Overview: In this article we are going to focus on investigating a franchise that has caught your attention. There is a significant amount of information on most web sites of franchisors these days. If you are serious about pursuing a franchise opportunity it is important that you have enough firsthand knowledge to make a decision based on facts and not emotion. This process will be the focus of this 6th article on our continuing series.

I want to know more about this franchise company than what is on their website so now what

You have been working with a franchise consultant or you have found some franchises that interest you. However you arrived here, you have narrowed down your interest to one or maybe two companies that you would like to find more information than their web site information. The typical process with a franchise consultant would go something like this.

You have looked at the web sites of several franchise companies and have narrowed your interest to a few so you let your consultant know who they are. You have been through their web sites and while you found quite a bit of information but now you want to get a better feel for the companies. The next step should be for your consultant to set up a call between you and the franchise director of the companies that you have expressed interest. Some franchise consultants will set up the calls as a 3 way conference call with them (franchise consultant acting as the facilitator) or they set up a call between you and the franchise executive. There is really no right or wrong way here, it is based on personal preference. The important point here is that you, the potential franchisee, have a chance to ask questions and hear the information that the franchise director has to share.

While there is no typical call, the average time frame for each of these calls will generally be less than an hour, but if you have plenty of questions it can go as long as you care to take it. The standard call will be an opportunity for the franchisor to get a feel for you as a potential franchisee. If you are working with a franchise consultant they would have passed along your ‘confidential questionnaire’ to the franchise executive before the call. This allows the franchise company to know something about you before they get on the phone with you.
There are as many call types as there are franchise companies so we will focus on a common type of call. In this example the call is set up and the franchise director for ABC Franchise Company has some information about you. They will typically confirm a few points of interest from your questionnaire just to make certain that you are truly interested, at least in gathering more information. They want to know more about you, just as you want to know about them.

After they hit on a few points to confirm your continued interest they will generally go into a prepared presentation. This will often include information you may have seen on their web sites and it will allow them to take things a little deeper. At this point they are feeling their way with you and want to present their opportunity as best possible and then hear what questions you have for them. This is a good platform for them to try to get a hint on your level of interest and your qualifications as a potential franchisee. The more thoughtful questions, it is believed the more engaged you are. This is important because there are many people that pretend to be interested; the franchise companies want to confirm they are working with someone that is interested. At this point, presume that you have asked good questions and the franchisor wants to get you information soon.

Once your questions have been answered, the franchise company will want to know if you are ready for the the next step. The next step at this point of the process is for them to send you their FDD. According to the July 2008 FTC rules, the franchise company can and probably will email the FDD to you. If you have been following along with our series, you already know what the FDD is and what to expect. If not, please refer to our article that explains the FDD in this series, article 5, How Do I Read This FDD?

After you have signed, dated and returned the receipt, Item 23 (your receipt) you will want to pay attention to Item 20 which will list the existing franchisees. (By the way, signing this receipt does not commit you to anything; it is simply a step in covering the FTC disclosure rules). Franchisees are people that are already doing what you are thinking about doing—running a franchise from ABC Franchise Company. These folks are living it every day and they are a wealth of information. And this is where we want to really put our focus in this article.

How many franchisees do I need to speak with?

There is much debate on how many franchisees you should contact and I am of the opinion there is no right number. If you have progressed this far in the process you have some ideas and some questions and you want to get them answered and/or explained. There is no real formula, ask enough to be comfortable--that is our mantra. Keeping comments straight could be a task all by itself so make sure you have a solid system in place to record the responses. If you are the type that needs lots and lots of validation, then by all means-go for it.

I am not aware of any real industry figures here but experience suggests that potential franchisees will generally contact at least 5 existing franchisees and often about 10. Again, I do not know that there is a right or wrong number; it has to feel right to you. This is all about you getting comfortable so when you are comfortable with the amount of feedback, great.

It is our opinion that some 'push back' from some franchisees would be a good thing. People are different and expereinces are different. It is likely that a franchisee in Santa Fe, New Mexico may have a different experience than one in Peoria, IL. Neither is right or wrong, you simply want to gather enough feedback so you are comfortable.

What can you ask these folks? The short answer is—anything. They reserve the right not to answer everything you ask and you need to be astute enough to understand the need to speak to franchisees with various levels of experience with the franchisor. For a valid representation it is generally a good idea to speak to franchisees in different geographic areas as well franchisees with varying levels of experience with the company. Franchisees just starting out can validate how the franchise company lives up to their claims for opening support, costs, etc. while those that have been in business for more than 1 year will have a greater level of experience and knowledge. This feedback should give you solid benchmark data. Again, we caution, that someone else’s experience will not necessarily be yours—good or bad.

Good starting place for questions.

Now that we have hit some of the ‘caveats’ let’s talk about what you may want to ask. We like to recommend that you write down all your questions and make several copies so you have one for each interview. Remember to put the person’s name and their location on the page for future use. This helps with consistency. It is almost a guarantee that you will forget who said what, especially if you have several contacts in the process. Many will have to call you back and it is easy to get confused in your notes unless you have a good method for tracking their comments.

It is a good idea to ask certain things that are consistent with the opportunity that you are working on. For instance if the company you are considering requires a retail location, it is prudent to ask each franchisee how the location support was handled by the franchisor.

Here are some examples we have heard. This is not intended to be all inclusive but may jog some other ideas as you go through the process.

1) How long have you been in business? Would you do it again? What is the best thing about this company? What do you wish you knew when you started that you can offer now?

2) What did you think of the training? Was it sufficient? What about the follow up from the company? Did they follow up to confirm your understanding? What did you like best about the training? What was least effective in your opinion? Was there anything that should have been covered that was not?

3) What did you think of the management team? Did they have the experience level to make you comfortable? Have they been accessible as promised? Do you have a mentor so you can check in when you have day to day questions?

4) How did you like the support for sight location and lease assistance (if applicable)? How about the start up costs, were they close to the FDD disclosed costs? Was the support everything promised? If not, what would you change?

5) If the company made an earnings claim (Item 19) on the FDD, are you tracking with their expectations? Have your costs and earnings been relatively consistent with projections? If not, what do you think caused the problem?

6) Do you feel like you are part of a team? Do they have annual meetings to get the franchisees together? If not, is it necessary or are you fine doing what you do day to day?

7) If the company did not issue an Item 19 on their FDD (earnings claim) how are you doing so far? Are you satisfied with your growth and earnings so far? Should you be doing something different? If so, is the company open to feedback?

8) How did the time frames work out for you? Were they pretty accurate with your expectations?

9) How many units do you own and would you own more if you could afford to?

10) What advice would you offer to a new franchisee that I have not already asked about?
This is a pretty good list of questions and should give you a real feel for the company from a franchisee viewpoint. As mentioned, it is likely that you will receive some positive and negative feedback. It is important that you are able to differentiate negative comments and you should feel free to contact the franchise executive to discuss any of these.

Listen and take notes!

Realistic expectations would suggest that you would hear from at least one franchisee that is less than enamored. Depending on your pool of contacts this could be significant or perhaps not. This is another validation why you will want to record the response so that you can review all of them and draw your conclusions from the total pool of feedback.

One of the primary reasons for purchasing a franchise is to take advantage of others who have gone before you and experienced things that you will experience. This opportunity is not available to most start up businesses so we encourage you to take full advantage of this exchange of information. Weigh the informatioon you receive and ask questions to the franchise company when you do not like the answers. Take the time to get the information from those that are doing it now and use it to your advantage.

As you are asking questions, do not stop after the first negative response you receive, but keep calling and see if this is a trend or an exception. Again, experience tells us there is rarely a shortage of complainers; the secret is to be able to determine if they would not be happy no matter what the situation or if they are legitimately voicing a concern that you should be know about.

For the most part, you will find that franchisees will be forthcoming with you and we always recommend that you take full advantage of this opportunity. As mentioned earlier, getting feedback from folks that are already involved in your ‘possible’ business is not an opportunity that exists in the standard business start up. Do not waste this opportunity and take good notes---you will need them. Good luck and go forth and question in good faith!

Related Articles
  Benefits and Responsibilities of Franchise Ownership
  Franchising with all its Success
  What is a Franchise?
  FAQs about Franchises
  About 60% of all franchise opportunities have less than 50 units.

Article Tags: abc, conference call, confidential questionnaire, facilitator, franchise companies, franchise company, franchise consultant, franchise consultants, franchise director, franchisee, franchises, franchisor, important point, personal preference, time frame, wrong way



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