At this point, you have demonstrated the Desire and made the Decision to continue the process of evaluating and selecting a franchise business. Now it’s time to take Action.
You are the only person who can conduct a thorough investigation of franchise opportunities and learn how they operate – and decide which one is right for you. I make this discovery process easier by enabling you to focus on those opportunities that best fit the criteria you set in our consultation meetings.
Here are the steps you should follow in your Discovery and Due Diligence process:
Contact the Franchise Organization
Visit the franchisor’s website, request a brochure and review their videos. You’ll likely be able to watch and listen to comments from company executives, as well as current franchisees.
Franchisors will typically ask you to complete their questionnaire to determine if you bring to the table the characteristics they are seeking in a business owner/operator. If you check out to their satisfaction, you’ll then continue your due diligence process.
Gauge your Expectations
Don’t expect to find a great fit with every company you contact. While I’ll help you with your homework, you have to make the ultimate decision which franchise is the best fit for you. Also, be aware that the franchisor will be checking you out as well; to determine how you fit with their organization, their business philosophy and their operating procedures. If neither of you think it’s a good match, there is no foul, no harm; just walk away.
Study the Franchise Disclosure Document (FDD)
A franchise must be registered in every state, and every franchise purchase requires filing of a Franchise Disclosure Document; also a regulatory requirement of the U. S. Federal Trade Commission (FTC).
This document contains critical information about the franchise organization; it’s history, business description and financial record. You should become very familiar with the contents of the FDD for every franchise you consider. I have provided a “sample Franchise Disclosure Document” to help you recognize and study the information.
Carefully review the company’s financials. Note any issues that raise questions to discuss with the franchisor. Reach out to me if you’d like my professional opinion. You may also want to review pertinent issues with your personal legal and financial advisors.
Call and visit Current Franchisees
The most valuable source of information for any franchise system is existing franchisees. Plan to call and visit several existing franchisees during your investigation. Whatever you find is the prevailing attitude of existing franchisees, it likely be your attitude if you join that franchise. Visit with enough franchise owners to ensure you recognize the culture of the total organization.
Use the list of “Franchisee Business Issues to Explore” to guide your discussions with current franchisees. It will help you learn all you can – and not miss any important issues or facts.
While you will find the majority of franchisees to be happy and supportive of the franchisor, it’s important to try to find an unhappy franchisee during your investigation. When you do, listen to their complaints and try to determine why this franchisee feels different from most. Weigh your feelings against what hear to help you decide if this is the right franchise for you.
Review Franchise Company Procedures
A strong franchise will have documented their systems, operations and marketing programs in a concise and easy-to-use format for the benefit of their franchisees. Make sure such documentation exists. The franchisor may not give you a copy of actual manuals, but can provide you with the table of contents or index of every support manual they use This will enable you to confirm that the documentation exists and will show the scope of the coverage for their major business practices.
Meet the Franchisor
At some point in this process you will want to meet personally with key personnel of the franchise company. This may be possible in your local market, or you may need to travel to their headquarters. Many franchise organizations conduct “Discovery Days” where you can go to a scheduled event and meet all their key people.
Get to know the people with whom you’ll be working most closely as you build your business. You should expect the company president to be professional and impressive; however that’s not who answers the phone when you call with a problem. Find out who provides operational support and training, and try to assess their performance. Make sure you get answers to any critical questions or issues at this meeting.
Make Your Decision
Your entire due diligence process will take 2-4 weeks to complete – for each franchise organization you consider. Once you have finished your investigation, you should be equipped with all the information you need to determine if this franchise is right for you.
Evaluate every opportunity against the criteria you defined in your business model. You will then know if it’s right to commit or to move on to another opportunity. Please remember, that as your advocate, it’s my job to help guide you to your decision as part of the free service I provide. And, I’ll be here to help you with the paperwork once you’ve made your final selection – and to wish you congratulations!
Now that you know all that’s involved, I’m looking forward to working with you. If you haven’t already done so, be sure to complete the information on my Contact page.
Let’s get you on the road to franchise success!