If you’re looking for a franchise for sale the best place to start is with an investigation into what you’re about to purchase. Nothing beats doing your homework which can include calling people related to the franchise system you want to purchase. The Franchise Disclosure Document should include a list of all existing franchisees so you can actually call each of them or limit your selection to 10 at random. Also, search online for former franchisees and get in contact with them.
Here is what you should ask these franchisees:
Was your First Unit Opening a Success?
This tends to be a broad question and you can rephrase it to further broaden its scope. The idea is to find out how the franchisor’s training and systems worked. When you get an honest answer it will tell you exactly how easy or difficult it was to make the process of operating and commencing the first unit. That said there are snarls and a few small annoyances when starting any new business but it till tell you exactly what caused these.
How Good are the Marketing Programs?
Many franchises require numerous marketing initiatives which are designed to help build a business by aiming to attract as many customers as possible. However, there are few things that arouse more controversy and emotion than a question about if the marketing programs prescribed work.
Does Everybody get along? Good or not good?
Many franchisors often describe their relationship with others as that of a family. Even though that is certainly true you still need to find out if it’s a workable relationship or just one with hugs and kisses. If you don’t want constant conflict with you being constantly called “meathead”, then knowing the answer to this question is very important. Having good feelings about the teamwork and support team of an organization which has the same value as you is always a big bonus.
How much can I make?
Business is about making money above everything else and so this is a very important question. This question should help you determine your estimated startup investment, average number of sales units, categories which will suck most of your investment, and overall net margins. This should help you estimate how long it will take for you to break even with the investment you make. However, when it comes to asking questions you should save the money or financial related questions for last. Many people may feel reluctant to discuss their finances with someone they currently don’t know. That said they will easily cover this once you have established a good relationship with them.
If you could go Back in Time would you Still Buy the Franchise?
This is a good way of asking if they regret the decision they have made. Regardless, of what answer you get always explore it further. Always respond ‘Why?’ to the most common answer you get and then say ‘yes’. It is important to understand that there are certain valid arguments for answering yes or even no, that said pride of ownership certainly tips the balance towards the positive. You should ask them for the strongest argument they can give to support their answer i.e. ‘Yes’. And then read between the lines.
The idea behind asking these questions and also making these calls is to find if it peaks your interest in the franchise. If you see that your interest wanes, it means that you’re probably either not suited for this type of business or you don’t think it will work. If you find that your interest has increased rapidly after these calls it is a solid positive sign that it will work and is the right thing for you. Sometimes it is just a better idea to trust your gut with these decisions. Your instincts will tell you by simply making you feel wrong or right about the decision you’re about to make which is correct in most cases and is a big help when it comes to making large decision like purchasing a franchise. That said for those who do not trust their instincts, the figures and the response they receive will help them know a great deal more about the business.
Featured images:
- License: Image author owned
Manu Alias has over 20 years of experience franchising as a senior franchise executive at MailPlus. He currently provides free consulting to people wanting to buy a franchise.