Buying a franchise is a big, life-changing decision and is cause for proper research. After all, you’re not just investing your money; you’re investing your time, talent and skills. You might also be investing your blood, sweat and tears.
Due Diligence
Be sure to conduct what those in the franchise industry call “due diligence.” The process of exploring every aspect of a franchise from the training and support the system provides to the total cost of the opportunity. A complete investigation will determine if that franchise is the best fit for you. And, it will also determine if you appreciate, and are excited about that franchise’s corporate culture.
The Interview Process
Interviewing people who have purchased the system before you is really the mid-way point of the due diligence process. It is essential to interview franchise owners when buying a franchise and, is one of the most important parts of the process.
This step comes after you have received a foundation of information on what the business is about. At this stage, you’ve already:
- Contacted the franchisor
- Received marketing material
- Reviewed the FDD (Franchise Disclosure Document)
Through interviewing franchisees, you’ll get a sense of the corporate culture and whether the owners are similar or different from you. In addition, you’ll get a sense of their level of success, the income and expenses involved and whether or not the franchise system will increase your chance of success.
Tip of the Day
For today’s tip of the day, Franchise Solutions recommends contacting at least 6-8 franchise owners within a system. But really, it would be wise to contact as many as it takes before you have heard everything once and understand it.
Which franchisees should you call?
1. The Superstar
Speak to a franchisee who is the top performer and generating the most revenue in the whole system. Talking to the leader of the pack will hopefully give you insight into their level of success. And most importantly, what it took to get there. Evaluate whether or not it matches what you aspire to be. If not, then this might not be the franchise for you.
2. Newbie
Talk to a new franchisee, straight out of the gate. One who has been an owner for 3 months or so and ask them about the training process and the support they’ve received. Interview them on the buying process and how that went for them.
3. Doppleganger
A dopplegagner is someone who is similar to you, and has the same life experiences and skill sets as you. This franchisee will likely view the world in the same manner. Getting their feedback will give you a sense of where you may be professionally.
4. D-Lister
Find out why things aren’t working out for a poor performer. Learn from their mistakes and take note of what Not to do.
5. Random Picks
Toward the end of the interview process, make a few random calls to franchisees who may not be expecting your call. You’ll be able to pick out a few names and numbers listed in the Item 21 of the FDD. This list will include the name, address and telephone number of every franchisee in the system.
Keep Calling
So long as you’re learning something new with each conversation, keep making those calls. The average person talks to eight franchisees. After you feel confident you know what it takes to be successful in that franchise system, move on to the rest of the due diligence process.