What to Ask a Franchisee

When you begin your franchise due diligence process of determining whether a particular franchise is right for you, you will need to contact current and past franchise business owners. This part of the process is referred as validation. During validation you speak with the owners and get their perspective.

Following are a list of questions to ask current franchise owners:

How long have you been in business?

Would you make the same decision again?

How is corporate support?

Are your earnings meeting your expectations?

What profit margin can I expect? - year 1, year 2, year 3

How long did it take you to break even?

Any unforeseen expenses?

What is your biggest challenge in the business?

How long do you plan to stay in this business?

What do you wish you would have known when you started?

What is the best thing about this company?

As you can see, these are the basic questions that will help you see beyond the surface of any franchise. With the help of a franchise consultant you will be able to find the answers, helping you make the right decision, thus making validation an extremely important step of the franchise due diligence process.

Path to Owning a Franchise

To break down a large goal into manageable tasks is necessary to be able to confidently complete any project. It is no different for finding a franchise business that meets your goals. We've broken down the process of buying a franchise into 3 simple steps: Exploration, Evaluation and Execution. This is our proven, E3 Process.

These steps can further be divided into sub parts. The following breakdown shows the typical path toward franchise ownership.

Exploration: Explore Your Goals

Analyze Lifestyle Needs

Analyze Business Goals

Analyze current financial position and future goals

Help Determine Type of Business

Evaluation: Evaluate Your Options

Research Applicable Franchises

Obtain Franchise Packet and FDD

Speak in-depth with Franchisors

Interview Existing Franchisees

Second Interview with Franchise

Consult with Attorney and Accountant

Visit Franchise Headquarters

Execution: Execute Your Plan

Enter Into A Franchise Agreement

Obtain Real Estate

Franchise Initial Training

Complete Construction

In-Store Training

Open For Business

On-Going Support

We've developed our proven E3 process of franchise due diligence to simplify and expedite the entire process. Contact one of our FranFinders expert Franchise Consultants today for your free franchise consultation.

Appealing Characteristics of a Franchise

Being able to quickly identify the type of franchise business that meets your interests and objectives will save you time and money not to mention headaches. By understanding the basic franchise characteristics you will be able to make better choices.

Franchises types fall into five basic categories. Understanding what is involved with each category will help you target the type of business that appeals to your needs. Below are listed the categories with their attributes.

Home Based

Low overhead

Low initial investment

No Inventory

No Receivables

No/Little equipment needed

No/Or Few employees

High income potential

Good working hours/Possibly part-time

Direct Marketing of your Services Necessary

Business to Business

Do business with other businesses

9-5/Business hours

No consumers

Sales related

Face to Face

Professional experience needed

High Income Potential

Management/Consulting experience

Direct Marketing of your Services Necessary

Service

Skilled to Non Skilled/Blue collar

Lower Education Requirements

Craftsmanship Techniques and Training

Manual or Hands On Work

Maintenance Industry or Focused

Management of Unskilled/Low wage employees

Lower initial investment

Strong Marketing Programs Incorporated

Moderate to High Income Potential

Passive/Absentee

Simple Business Models

Investment Return Major Characteristic

Management of Few Unskilled/Low wage Employees

Moderate investment Moderate to Good Income

No need to be there/Part-time

Multiple Unit Potential

Continues Working Current Job/Running Current Business

Strong Marketing Programs Incorporated

Retail/Food

Looking for latest trends/Fad businesses

Brand name recognition

7 days a week/Long hours

Manage unskilled/Low wage employees/High turnover

Cash business

High initial investment

Building/Lease

Equipment/Fixtures

High ongoing overhead/Operating costs

Long start up process/Build out

Inventory/Spoilage

No selling/Open door customers come to you

Moderate/Good Income

Now that you know the basic categories and their main characteristics, you can make a better decision as to which franchise is best for you.

When conducting your franchise due diligence, keep in mind the free services of FranFinders expert franchise consultants.

Importance of the Franchise Due Diligence Process

The entire process of franchise due diligence, for both a Franchisor and a Franchise Candidate, should be about determining whether there is unified thinking. The best advice is to step back at the end of your due diligence process and ask yourself the following question: Did the process help both parties to determine if they have unified thinking about the franchise business at hand? If the answer is not yes, then you've either got more work to do, or something with the system is not right, and you should examine alternatives.

Franchising is about finding the right strategic-partnerships to allow both parties to prosper at a higher level together than they would if they were not to enter into an agreement to do business together.

First of all, you must be comfortable with the Franchising concept itself. The business of the Franchisor is not Franchising. Their business is fast food, or muffler parts, or telecom consulting. Franchising is their strategy to execute that business with optimum results. 

Franchising is the Franchisor's strategy to penetrate and dominate a marketplace - simultaneously. You've got to be comfortable with the Franchisor's strategies to do just that. If those strategies make sense to you, it can be a great ride in achieving success together. It can be a great ride in building a brand that increases in value as time marches on. Franchising is also the Franchisor's strategy of pooling resources. Those resources include the resources of the Franchisor, as well as those of the individuals that join the system as Franchisees including their ideas, talents, motivations, financial and management resources.

If you are comfortable with these basic concepts of Franchising, you should then assess your needs, wants and desires to make sure that they can be met with a successful Franchise in the system. You should also bring to the surface all of your fears, uncertainties, and doubts to determine if you feel you can help solve them with the business of the Franchisor, and the future you can create for yourself with that business. The worst thing you can do is leave them buried.

Then there are the basic pragmatic questions. Will the Operating Systems of the Franchisor help you to deliver the business products and services more efficiently, and will they help you avoid re-creating a whole slew of wheels? Will the Support Systems help you to deliver the products and services better and better over time? Will the Brand continue to increase in value for your benefit?

Finally, can you see yourself reaching your goals, dreams and objectives by operating a successful business in the Franchisor's system? Will the Franchise help you to achieve those goals and dreams?

If the Franchisor's strategies make sense to you, and you can see yourself achieving your goals and dreams through the Franchise and its systems, then you have unified thinking - and the sky can be your only limit

When conducting your franchise due diligence, keep in mind the free services of FranFinders expert franchise consultants.