When researching a franchise opportunity, talking with franchisees in the system is one of the most important things you have to do. No one knows the business like those out in the field. And providing you build the proper rapport, they are likely to give you candid answers to your questions. A thing which will, in turn, help you decide if this opportunity is right for you.
You will want to speak with several franchisees, preferably some of whom are very successful and also some who are struggling. Review the responses and compare your own management style to those currently operating stores. You will have a better idea of where you might end up if you purchase this franchise.
Is it really that necessary to talk to current franchisees? Taking your time reaching out to franchisees will give you benefits and awareness as well before becoming one of them.
Why Take Time To Talk To Franchisees
Talking with franchisees is beneficial for you. They have passed the situation of being new in the business and they’ve done ways they think are effective in running the business. Through franchisees, you will also know the reality of the franchise opportunity that you are interested in purchasing.
Understand that the existing franchisees have entrusted their investments to the company that you’re about to commit to. Taking your time talking to some of them will make you decide if the company is really worth taking a risk.
To help you get in touch with these franchisees, you can ask the franchisor where you can meet them or maybe where are their locations. One thing to keep in mind is that there will be other potential franchisees who will be researching franchise opportunities. A franchisor’s more successful franchisees in particular have to field a number of these calls.
Organizing a clear itinerary of subjects to discuss will help you and the franchisee save time. There are several aspects you should know during your talk with the franchisees. Learn each of them below.
8 Franchising Aspects You Should Know From Franchisees
You will find that the checklist below covers the most important areas you will want to discuss when talking with existing franchisees.
1. Franchisor/ Franchisee Relationship
A good franchise company will work continuously to keep its current franchisees happy and open communication is paramount. If the majority of franchisees feel good about the franchisor, it is a sign that the company is supportive, caring, and focused on the success of its franchisees.
During your talk with a franchisee, you can ask them questions such as:
2. The Training System
Ideally, the training a new franchisee receives should prepare him to open and run the business. You probably hear from the franchisees that they were unprepared for some of these issues. By then, you could assume the training program needs more work.
Be sure you understand the critical elements necessary for success and how the franchisor will help provide these elements before you become involved. The training system consists of 2 major stages. The pre-training and the continuous training.
As you’re talking with franchisees, ask them how’s the training they get before and during they’re running the business.
3. General Support
You should expect to get a glowing report on the overall support provided by a franchisor to the franchisees who have been in business for a while. This support should include helping the franchisees resolve any problems that arise and providing ongoing training as needed.
A franchisor should also be responsive to changes in the marketplace. So you will want to gauge the comments of franchisees about how innovations/changes to the system are integrated. You can ask questions like:
4. Opening Support
A franchise company can truly shine when it provides superior support to the new franchisee during the opening of the business. Don’t miss to ask questions when talking with franchisees if they received assistance in:
Preparing for the opening day can be stressful for franchisees if they lack the franchisor’s support in this aspect. You will know information about it from existing franchisees.
5. Marketing Programs
You won’t make a profit if you don’t have customers. For that reason, most franchisors collect marketing dollars from each of their franchisees and spend the combined amount to promote brand awareness on a large scale.
Being part of a well-known brand is a major advantage of a franchise system and is usually worth the money spent. Find out how the existing franchisees feel about the way their money is spent.
But beware – this is the one area you are most likely to find complaints as some franchisees consider themselves marketing experts. Balancing all feedback is essential in this area.
6. Initial Investment
Before talking with franchisees, you should have read the franchisor’s FDD. Franchise Disclosure Document will give you a wide range of the total initial investment that is required for opening this business.
You can get a better feel for the investment required by talking to the franchisees and learning what they spent. And even more importantly, learning what they’d do differently if they could do it over again.
This is a great question for franchisees who operate in markets similar to yours. You can get a better idea of the costs you will face in opening your franchise.
7. Purchasing Power
Another huge advantage of being part of a franchise system is the purchasing power. Be sure to find out if the franchisor uses the collective buying power of the total system. In purchasing power, franchisees will have the benefit of getting discounted pricing on equipment and inventory.
Talking with franchisees will give you details on how often does the franchisor opens this opportunity. In their tenure in the business, ask them how much savings do they get in availing products during the purchasing power.
Everyone’s favorite subject – the discussion of earnings between a franchisor and a potential franchisee – is strictly regulated. You can often find earnings information in Item 19 of the FDD. But, your best source of information is from the current franchisees.
Hopefully, by the time you get to this aspect on your checklist, you have already developed a relationship with the franchisee. That way, it will be comfortable for you to ask questions such as:
You can also glean valuable earnings information by talking about the average number of customers, average ticket or invoice amount, or even average number of calls or visits per sale!
If you don’t get a clear idea of what a typical unit earns, do not proceed with the purchase. You are not interested in franchising because you want to be surprised. You are buying a franchise because of the proven and guaranteed value of the franchisor’s system.
Talking with franchisees is helpful for your research in finding a franchise perfect for you. Observe the answers from each one you meet. Take notes about what they say.
Compare the responses of the different franchisees you talked with. You may be able to see a trend that will help you determine if the success or failure of a franchisee is either: due more to the personality/experience of the franchisee or to the support/system of the franchisor.
Your satisfaction and happiness as a franchisee can depend not only on your success but on the overall culture of the franchise system. By talking to current franchisees you will learn the answers to many questions you may have. You will also find out if you’d fit in with the franchisees.
These people will be your future peers. They are valuable resources to you as you build your business. By talking to a number of franchisees you should get a clear picture of how you would fit in the organization.