Don’t screw up the #1 most critical step during franchise discovery
The most critical step in the franchise discovery process is VALIDATION. That’s where the rubber meets the road and the process really gains momentum.
Once you’ve been through the initial brand overviews, reviewed the Franchise Disclosure Document, and have a solid understanding of the franchise systems, the next step is the most important. This is the stage where you will have access to the most valuable source of information on any franchise system: THE FRANCHISE OWNERS.
This is known as “validation” stage, where you speak to the people who actually own and operate units of the franchise business you are considering. You get to hear their valuable insight and candid thoughts on their experiences as franchisees.
By talking to the franchise owners, you'll quickly get a sense of whether the system works, and if the franchisees feel they’ve made a worthwhile investment. The big goal is to figure out whether this particular business can help you meet your financial and lifestyle goals.
10 most valuable validation questions to ask franchisees:
1: How long after signing your franchise agreement did it take to open your doors for business?
Completing onboarding and training can take longer than you think. Did you do anything differently to accelerate the timeline?
2: (For brick and mortar businesses) How does the franchisor assist with site selection?
Selecting a prime location is one of the most critical tasks on any list.
3: How effective is your overall marketing strategy?
What role does the franchisor play in the marketing strategy? How do you differentiate your business from competitors, and what are your competitive advantages? Where are your customers coming from?
4: How has your revenue ramped up?
This one question can help you dig into a variety of topics including marketing, pricing, customer retention, customer statistics, etc. Use this as a broad starting point to nail down some financial statistics.
5: Did the financial assumptions you built into your pro forma turn out to be accurate?
You’ll want to know answers about profitability and time to break even. Use this question to start a conversation, because it can be a sensitive subject for owners who might not want to respond to direct questions about income and profitability.
6: How difficult has it been to staff your business?
Most business owners will tell you that the most challenging part of ownership is finding, retaining, and managing great people. Ask questions to understand the specific challenges related to talent management in this business.
7: What are the greatest rewards of owning this franchise?
Everyone defines success in different ways – for some it may be about the financial benefits, and for others it may be having control and flexibility over their schedule. You may discover some unexpected benefits by asking this question.
8: What are the biggest challenges of owning this franchise?
There may be an issue that you did not foresee. Again, this different owners will have different answers. So, it is important to ask everyone this question to solicit different opinions.
9: What are the most important skills needed for an owner to be successful in this business?
Is it team building, marketing, sales, financial management, customer service, or something else? Is your skill set a good match for this business?
10: Are you planning to expand to additional locations/territories?
If the owner is looking to expand, that is a big positive. If they are NOT looking to expand, there are various reasons why that could be the case. Ask follow-up questions to understand the whole story so you can evaluate the situation.
I can help you get the most out of your discovery process. Or if you’re just starting to look at franchises, I can help you with an efficient search to find the best fit. Schedule a call with me and let’s go!