Exploring Franchise Opportunites: Get the Answers YOU Need!

Transitioning corporate executives and other individuals that may be exploring franchising as a career alternative often ask me to help them outline questions to ask franchisees and franchisors as they’re doing their due diligence. Here’s how I advise them…

Using the Franchise Disclosure Document (FDD) as my guide, I would ask very specific questions. I would follow the FDD item by item and ask questions pertaining to each section. It’s a can’t-miss road map.

Exploring a franchise opportunity outside the United States? As most franchisors are either based in the United States, or, at the very least, offer franchises within the United States, they will already have developed a Franchise Disclosure Document to provide to franchise candidates before the franchisor can accept any money from the franchise candidate. As they are required to do so, I would request a copy of the FDD about any franchise concept you may be exploring. You may do so directly from the franchisor or from the various federal and state agencies within the United States of which most can be accessed online.

Get to understand the history of the concept. The passion of the founder. The experience of the executive and support teams. Have they actually worked in a location? Have they owned a business before? Kind of hard to provide guidance if they haven’t!

Make them validate the expenses involved and gain a complete understanding of the range of expenses and why? Ask questions about assistance from finding a location through to grand opening. Ask about the temperament of the franchise group as a whole and within your market. Of course, I highly recommend speaking with franchisees too. Make sure to ask them point blank questions about costs, problems, profits, trends, etc. Ask the franchisor and franchisees about the competition. Ask about business, revenue trends of the system as a whole.

Ask questions about the operations manual. Ask questions about advertising cooperatives and associated fees. Focus on year two and three that are usually turning points in your business and relationship with franchisor. Ask questions about normal, routine support and support if you are in trouble, crisis!

Ask about exit strategies. Either because you want to exit or because you must exit. Ask about transfer fees and the process in selling your business. Understand the franchisor’s approval process.

Ask questions about franchisor’s litigation. Know the why’s and how’s. Ask why each franchisee listed as having failed, actually failed?

More than anything, after this process is complete, trust your gut instinct! Take your time and think this completely through until you’re 100% sure of your decision. Make sure you have all your support mechanisms in place including friends and family. Do not kid yourself. Do not lie to yourself. And, do not justify any negatives.

Do you have a favorite question or two to add? Please submit them below.

“Franchise Today” on BlogTalkRadio – Podcasts Now Available On-Demand

Joel Libava, aka The Franchise King, and I, continue to generate excitement each week on what has been dubbed, “The Bagel and Pasta Franchise Hour.” Plans to officially rename the show have been finalized, and both Joel and I are proud to announce the new name, Franchise Today.

As most franchise professionals are aware, Joel and I both have extensive experience within the franchise industry and frequently write about different aspects of franchising on our respective blogs, The Franchise King Blog and franchisEssentials.

Each week, we focus on the world of franchising, franchise blogs, news and events. In addition, we explore new and unique franchise opportunities, and routinely discuss items of interest to franchisors and franchisees alike including social media, traditional marketing, lead generation and more. With similar philosophies, and direct approach, along with complementing bits of sarcasm and humor, the show is an exciting experience every week. See what The Franchise King has to say!

The show airs LIVE every Thursday at 1 PM CST / 2 PM EST.

Podcasts Now Available On-Demand

Effectively Using Linkedin

As social media continues to gain steam and obviously is not going away, more and more people are looking to participate. Unfortunately, many are intimidated and quickly give up. I routinely work with individuals, in both personal and business settings, explore and understand social media and its benefits. I have found simplicity is key in getting started.

I would like to share my response to a question previously posted on Linkedin, “If there was one piece of advice you would give someone who was new to Linkedin or had not really been effective at using it. What would you tell them or show them?”

The most important piece of advice I would share is defined in my own “Triple P Tripod” plan. A tripod as everyone knows, stands on three legs. If one leg isn’t as strong as the others, is different in length, or is missing altogether, the tripod falls. At best, it precariously stands when leaned against the wall only to fall at the slightest movement. The triple “P” refers to three action words, Personalization, Participation, and Patience.

Personalization – Just as when you enter a room full of people, it’s your personality and how you handle yourself that gets you noticed. On Linkedin, the same holds true. Starting with your profile, make sure it reflects you as you want to be perceived.

Misspelling and poor grammar are akin to an open fly or a skirt tucked in pantyhose at an in-person event. Yes, you’ll be remembered, but for the wrong reasons. Enter discussion groups with grace. In other words, without being obnoxious or obtrusive. Develop your own style, your own points of view. Just as when you leave an in-person event and thank your host and say adieu to the people you have been conversing with, also thank individuals that took the time to answer the questions you posted in a LinkedIn group. Keep in mind, as in anything that is written, your words will last forever as they become your personal stamp.

Participation – It’s important to participate in various groups on Linkedin. Be proactive in groups you’re directly interested in as well as “collateral” groups that touch on your areas of interest. For instance, if you’re interest is in franchising, you would most likely join several franchise groups. Now, look at entrepreneur, small business and marketing groups.

When posting a question in one group, post it in the others to gain a different perspective. For example, the question, “How would you define franchising?” is answered much differently in a franchise forum than in an entrepreneur forum. Certainly, much different in a marketing or sales forum.

At first, I would recommend responding to posts to get a feel for how it’s done and more importantly, a feel for the group. It’s always best to test the waters with your toe than it is to just jump right in. Yes, there may be sharks in the Linkedin waters and they’ll attack at the first sign of weakness.

Next, post simple discussions and remember to respond to and thank each person that has taken the time to participate in “your” discussion. As you’re comfortable, start your own group. If you’re very interested in a particular group and are unhappy with participation or feel membership is lacking, contact the group owner and offer to to help recruit members as a manager of the group.

Patience – At first, a newcomer to Linkedin will feel overwhelmed. Actually, that may be putting it mildly especially if you’re less than experienced in social networking, or texting and sending instant messages by phone. Take a deep breath and understand this is not rocket science. Take it one step at a time.

Preview the Linkedin Learning Center and refer to it again and again. Use the Help section. Search online for articles and tips on using Linkedin. Explore all aspects of Linkedin as a kid in a candy store. You’ll find things you never knew existed about Linkedin that can help you achieve your objectives. After considerable time working with Linkedin, I’m still amazed when I discover something new, either by accident or by learning from others.

To this day, I’m excited by signing in to Linkedin and exploring new groups, uncovering new opportunities, seeing who responded to my last post and who commented on my last response, and most importantly, meeting new people and developing online relationships that over time turn into rewarding personal relationships. I’ve actually connected with one of my boyhood heroes, a former ballplayer turned marketing executive, on Linkedin, that I now communicate with on a regular basis!

Happy networking!

Franchise Sales: A Tale of Two Theories

Back in April, there was a discussion in the Franchise Executives group on LinkedIn with the posted question, “Who is using outside franchise sales groups [brokers]?” The question was posted by Mark Johnson, COO at Rocksolid Granit USA. Mark went on to state as part of his post, “We have been fortunate to be able to sell our franchises by word of mouth. We do little or no advertising (Franchise Handbook and Franchise Opportunities). We are considering working with one or more Franchise sales groups. We have visited with these organizations in the past but would be interested in suggestions and why you would suggest a particular group or individual.” Below are some interesting responses from the group members that are not franchise consultants or brokers:

An experienced franchise executive stated: “Why wouldn’t you develop your own small sales group? Using a service that sells multiple franchises diminishes your quality control to some degree. I have been a part of 2 franchisors for 25 years and neither has ever used any of these groups and we have had lots of success. What are you trying to achieve by using these”groups”? Lower cost of acquisition, less hassle, expecting more leads, more foot soliders?”

The president of a national franchise concept wrote: “We do not work with an outside group. In talking with our prospects it seems important to them to know that our development staff are part of the company and experts on the concept they are selling. We even have a dedicated sales team for each concept. My advice is to talk with some of your new franchisees to see if it would have made a difference in their decision making process.”

A franchise attorney posted his response: “…if you use an outside broker in the true “sales” role, they can lose credibility if they appear detached and not knowledgeable about what they’re selling (often happens when your brand is only one of many in the broker’s portfolio). That should factor into your due diligence process when you’re looking at outside brokers. But when the relationship stays between the franchisee and the sales person, the prospect’s going to be let down when that sale is done and the sales person is on to the next prospect. Besides, I always wanted my sales person’s relationship with the prospect to taper off once the sale was done – the franchisee’s relationship should be with someone on the development then someone on the operations team. Two points – first, I always caution my clients to use brokers more as “matchmakers” rather than “salesmen.” What should really “sell” the franchise is not the sales person (internal or external) or the broker, but the confidence that the prospect has in the brand and in the ability of the management team; and, second, if my clients use outside sales people, I always make sure the outside sales team attend the same training I give my client’s internal team and do so at the same time. That way the outside sales folks get entrenched into the company’s culture, they know what to expect from management, they see how to use management to “sell” the franchise, and they know what management expects of them.”

A Vice President of a national franchise concept went on to write: “For a variety of reasons I’m personally a big believer in building sales teams from within the company. But then again I’ve had the luxury of working for established franchisors and had resources to either develop salespeople from within the company, or rely on referrals to hire from outside and train them to become franchise salespeople. Both methods take time – generally about 12 months for a franchise salesperson to really “hit their stride”. Many franchisors don’t want to wait that long, or can’t wait that long, or don’t know how to train franchise salespeople. In those situations it may make sense to bring on outside franchise sales groups.”

Let’s hear what you have to say…

The 5th Annual Franchisee Satisfaction Awards

The Franchisee Satisfaction Awards sponsored by Franchise Business Review are the industry’s most prestigious awards, honoring excellence in franchising. Each year, Franchise Business Review conducts thousands of independent surveys of franchisees across the industry. The Franchisee Satisfaction Awards recognize the leading franchise companies with the highest levels of overall satisfaction among their franchise operators.

Franchise Business Review presents awards to the top rated franchises in 17 industry categories: Advertising & Sales, Automotive, Business Services, Child Services, Cleaning & Maintenance, Financial & Tax, Food, Health & Beauty, Home Services, Pet Services, Real Estate, Specialty Retail, Senior Care, Services, Sports & Recreation, Technology and Travel & Hospitality. The top franchise within each category is also honored with a Best Franchise in Category award. Additionally, franchise companies are recognized in other categories including investment level, overall system size, most improved satisfaction, and Franchise of the Year.

Since 2005, nearly 500 leading franchise systems have participated in Franchise Business Review’s annual Franchisee Satisfaction Awards. 150 of those franchise businesses have been recognized for their system’s excellence, as rated and reviewed by their own franchisees.

FOR MORE INFORMATION

REGISTER HERE