The investigative process of reviewing franchise concepts is best accomplished with a measured approach. It takes patience to do it right, but you’ll see it’s for your own good. Choosing a franchise that matches up with your skillset, experience, income level, and lifestyle goals is a very important decision that you must get right. There’s plenty of information to process and consider before you arrive at the decision-making point. So don’t get overwhelmed.
To break it down and make things easier, here’s a four-step research plan to follow, which should help you narrow your franchise choices in determining the best fit.
Step 1 – Interview Your Choices
Whether working with a franchise consultant (recommended) or on your own, arrange an introductory call with the franchisor’s representative. By the time you’re ready to ask questions, you should already be well-informed of their business model. Ideally, you will have read the Franchise Disclosure Document (FDD) cover-to-cover, making notes for your conversation. During the call, strive to make the best impression. Because in reality, the franchisor is interviewing you as well.
Step 2 – Seek Validation
Validation is where you get the opportunity to ask questions and form opinions with other franchisees in the system—without the brand eavesdropping on your conversations. For your validation targets, it’s advisable to ask the franchisor for owners with a similar background or geographical location. Don’t just seek the best and brightest earners in the system. You’ll want to talk to others who may not be meeting benchmarks—and even previous franchisees. If you’re unsure of the type of questions to ask, FranNet and SCORE have a thorough list of examples on page 16 of their Roadmap to Success workbook.
Step 3 – The Big Visit
Known in the franchise industry as “Discovery Day”, this is a prospective franchisee’s opportunity to meet with the brand and assess one another. Typically, this includes a visit to corporate headquarters, where the prospect can meet the executive leadership and other franchisees. While the pandemic has temporarily altered many in-person visits, franchisors have taken measures to ensure that person-to-person evaluations continue. You should have most of your questions about operations answered by now, but Discovery Day is actually more about getting a feel for their company culture—and whether you’d be a good fit. If you choose to buy a franchise from them, these will be your new colleagues!
Step 4 – Final Approach
At the beginning of this blog, we talked about the importance of patience in your due diligence. You’ll be taking it up a notch in this last step. Once you’ve completed a successful Discovery Day, it’s time to bring in professional advisors. If you’re neither an attorney nor an accountant, you must find one of each. An attorney should review the franchise agreement from a legal perspective to make sure you understand your obligations as a representative of the brand. An accountant will review the franchisor’s numbers, and your own financial capabilities, to meet the obligations required to purchase and operate the business until your break-even point.
If you can successfully complete all four steps in the investigative process by following these instructions, you should be well-positioned to make an informed decision on which franchise ownership opportunity is right for you. What’s more, you’ll have the confidence and peace of mind in knowing you went about your due diligence patiently and thoroughly to make the right choice.
When you do finally sign your franchise agreement, we’ll have but one thing left to say. Welcome to the Club!