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Prospective Franchisees May Need to Dig Deep
For the Right Answers

by Ed Teixeira

Existing franchisees can be a valuable source of information for franchise candidates; however, it may take some extra effort to get the right answers.

In addition to the information contained in the Franchise Disclosure Document, most industry experts would agree that existing franchisees can be the most credible resource when evaluating a franchise opportunity. After all is said and done it’s the franchisees that have had the experience of operating the franchises and it follows that this experience can be invaluable.

Franchise candidates are encouraged to contact and interview as many existing franchisees as possible when conducting their due diligence. There are even suggested questions and topics that the candidate should ask during the interview. These questions are available on the Internet and on sites including, the FTC, IFA and AAFD.

When speaking with existing franchisees there are certain questions that will be more readily answered than others. Subjects like franchisor support, individual franchisee financial results and whether or not a franchisee is fully satisfied with the franchise may evoke less than candid responses. The reasons why it may be difficult to get the right answers may be attributable to

  1. Some franchisees fear possible retribution from the franchisor if found to have provide negative comments regarding franchisor performance.
  2. Many franchisees are reluctant to provide some of their financial results to candidates. This could be for confidentiality reasons or the results haven’t been very good.
  3. Whether it’s their ego or for other reasons, certain franchisees are reluctant to acknowledge that the franchise is a failure.
Here are some suggestions that may help to get answers to the more challenging questions:
  •  Ask the franchisee open ended questions rather than seeking a direct response. It may take a bit more effort to evoke the correct response but the in the end the information can be more useful. Questions such as “Is your franchise profitable?” are too direct and the yes answer may not be very meaningful. Rather, ask if the franchisee did a business plan and financial projections. Try to determine how long it took the franchise to be profitable. Since it may be difficult to get actual numbers from the franchisee focus on whether or not the franchise has met expectations.

  • When it comes to franchisor support the best approach is to ask questions that are presented in a positive rather than negative way. An example would be; “What are some of the positive things that the franchisor does to support the franchisees”? Look for how the question is answered and if the franchisee takes some time to respond it could indicate that the franchisor is not as supportive as they should be.
  • It’s often suggested that a franchisee should be asked “If you had to do it over again would you still invest in the franchise?” Since the franchisee can only provide a yes or no answer, I would ask; “Have you considered buying another franchise?” This may allow you to probe much deeper into just how satisfied the franchisee is.<

Although, existing franchisees can be the source of valuable feedback getting the right answers may require time, patience and a bit of reserve psychology.

  

© 2015 FranchiseKnowHow, LLC

Ed Teixeira is the President of FranchiseKnowHow.com and Chief Operating Officer, FranchiseGrade.com. He is a former franchise executive and franchisee. He can be contacted at 631-246-5782 or at  franchiseknowhow@gmail.com

 

 

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