9 Key Questions To Ask Franchisors

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9 Key Questions To Ask Franchisors

Dan Citrenbaum August 31, 2015

The stories are legion about people who’ve breathed new life into their careers with a franchise or even a slew of franchises. But there are some pretty notable misses in the franchise business, as well. Just think Quizno’s or Curves, two franchise systems that, for different reasons, have faltered: Quizno’s, the once promising sandwich shop, is now in bankruptcy; and Curves, fitness centers for women of a certain size, is a shadow of its former self. While it’s true that nothing in life is guaranteed, you can do quite a bit to minimize your risk by thoroughly checking into a franchisor’s track record. The federal government requires all franchisors to disclose much useful information in its Franchise Disclosure Document (FDD), and then, of course, the franchisees can tell you firsthand about their experiences with the company. Critical to your background research is your conversation with the franchisor. Most franchisors will have a standard protocol for potential new franchisees that include in-person and telephone meetings with selected executives as well as lots of reading materials to introduce you to the franchisor’s system. You need to use this opportunity to zero in on the issues that are critical to helping a new franchisee succeed.


9 Key Questions To Ask Franchisors

1. How much will it cost to purchase the franchise?

These numbers will be broken down and listed in the FDD, but you want to hear what the franchisor has to say on the subject. If they try to sugarcoat the costs in any way that doesn’t match your background research, alarm bells should sound in your brain. You always want the facts delivered to you straight. After all, one of the worst positions you can find yourself in is to have run out of capital before your business becomes profitable.

2. What is the background of the business and company executives?

While this information, including previous litigation, will be listed in Items 1-3 of the FDD, you want to get a sense of who these people are. Follow your gut. If you feel someone isn’t being genuine or truthful with you, stay away.

3. How old and established is the franchise?

Ask executives about how the company has evolved and, ideally, improved over the years. If it’s a fairly new franchise, what are the company’s plans for growth, and how will they help their franchisees to succeed?

4. What is the success rate of franchisees?

They may give you a rosy window into franchisee success, but you can ask good questions if you’ve first read about any claims the company may have made in the FDD. You should also be more knowledgeable if you’ve already interviewed franchisees for whom you can find contact information in the FDD.

5. What type of training program does the franchisor offer?

How much ongoing support will you get? Are particular executives assigned to your region? Will you always be able to get someone on the phone for a consultation?

6. What exactly is involved with the system?

You need to determine if this this a system you are capable of following. Also is the system sufficient to help you achieve success. Sometimes, newer franchises may still be working out the kinks.

7. If things go badly for a new franchisee, what does the franchisor do to help?

Is there a triage system of some kind? Good franchisors should have adequate support to help you during the start-up phase, when you may hit a few stumbling blocks.

8. How competitive is the market?

It might seem like some business sectors are flooded with competitors. Maybe that means the field is too crowded. That might, however, be a sign of strong, growing demand. You will want to know how the franchisor feels about local competition, and what plans they have for helping you to succeed in a competitive market.

9. What activities does the owner spend their time on?

Just because McDonalds sells hamburgers does not mean that the owner spends their days flipping burgers. When you first consider a franchise, the role of the owner might also be surprising. You will want to learn what tasks take the owner’s time. Then, you can assess if you have the right skills and interest to excel in those areas At the end of the research, after you have talked to several franchisors and narrowed down your list to one, you will visit the franchisor on a Franchise Discovery Day. Check out whether the infrastructure is actually in place. Is there a training center? Are the executives interested in you? Can you establish a good rapport with them? And only then will you be ready to proceed. Of course, before you sign on any dotted line, you will want advice from objective experts, such as a good franchise attorney.

Ready to make your dream of becoming an entrepreneur come true? Get your free evaluation today! Contact Dan Citrenbaum to help you create the career you’ve always wanted. As a business coach, Dan brings years of experience helping people select and buy a franchise or existing business. You can reach Dan at dcitrenbaum@gmail.com or at (484) 278-5489.

Are You Cut Out for a Franchise? Take the Quiz!

Buying a franchise is one of the quickest, safest ways to start your own business, but a franchise is not for everyone, particularly if you’re the type of person who likes to blaze your own trail.

For starters, to be successful with a franchise — that is to maximize your potential earnings — you must be prepared to follow the franchisor’s system, the time-tested method the company has for virtually every aspect of its operations, including staffing protocols, an advertising campaign and store build-out plans.

After working with dozens of franchisees over the years, I still see new franchisees decide they can cut corners, for example, by declining to hire enough people to cover the day-to-day responsibilities of meeting the needs of customers.

The owner may decide to save money by doing some of the work himself, for example, cleaning houses or caring for seniors. As a result the owner has less time to build the business, creating a steady and growing clientele to generate earnings. While that owner may save some upfront costs, he or she loses long-term earnings potential.

So how do you know if you are a good candidate for a franchise? Answer eight easy questions:

  1. Are you prepared to thoroughly research the business?

Selecting a franchise may be your first most important step, and the process requires solid research, from reading background materials to putting shoe leather to pavement and visiting franchisees.

  1. Are you prepared to work hard?

Just because the business comes with a system doesn’t mean you won’t have a learning curve. Of course, once you have good employees in place and operations running smoothly, many franchise operations will allow you to take an afternoon for golf or to attend a child’s track meet. Many franchisees set a realistic goal to work 30 to 35 hours per week within three to five years of starting their business.

  1. Can you call for assistance when needed?

A good franchisor wants to help you through the start-up phase, so to take full advantage of what you’re paying for, you need to be willing to ask for guidance. A good franchisor will likely offer many good suggestions, possibly a long to-do list that will require time to implement.

  1. Do you have enough capital to set up the business to operate as designed?

Before you buy the franchise, your research should have told you how long it will take to operate in the black, and the Franchise Disclosure Document will tell you your upfront expenses. Getting to profitability varies by location and franchisee. You will need to be work hard and pay operating expenses for some time before earnings begin.

  1. Can you accept paying the franchisor royalties and other specified fees?

These fees are the price you pay for a proven operating system, built-in research and development, a fully vetted list of suppliers, as well as an advertising campaign and ongoing support and training.

  1. Will you accept structure in your business?

If you would rather create your own approach to a unique business that reflects your particular vision for a product line or service, you don’t want a franchise.

  1. Can you accept advice from authority?

When you buy into a franchise system, you are part of a team, and the franchisor needs each of its franchisees to present a consistent image to the buying public. No reinventing the system.

  1. And, most importantly, can you trust the system to work?

If the answer is no, then don’t buy the franchise.

Ideally, you will answer yes to each of these questions. If you answered no to more than two, then you might want to consider an independent business. I also suggest you consult a franchise coach, who is in the business to help you make the best decision to ensure success.

After all, what you want most is to have a business you enjoy in which you can excel and which will also earn a tidy profit.

Ready to make your dream of becoming an entrepreneur come true?

Get your free evaluation today!

Contact Dan Citrenbaum to help you create the career you’ve always wanted. As a franchise coach, Dan brings years of experience helping people select and buy a franchise or existing business. You can reach Dan at dcitrenbaum@gmail.com or at (484)278-4589.

Franchise Discovery Day: To Clinch A Deal?

Discovery Day presents a make-or-break moment for many would-be franchisees. For Megan Yu, a visit to the franchise parent company of Signarama, United Franchise Group, in West Palm Beach, Fla., helped seal her decision. Of course, by this time, she and her partner, Andy Yu, her father, had already spent almost six months researching businesses they might open in Ann Arbor, Mich. Casting a wide net at first, they looked at all options, including purchasing an independent business. They chose a franchise because they liked all the support and training offered as part of the deal. “For me it was the one-on-one interactions with the owners that was huge,” Megan said. Meeting other franchisees who shared their own experiences and offered a ready support network raised Megan’s comfort level with this new business. During a carefully choreographed Discovery Day, Megan was greeted by her “host” at her hotel and taken to company headquarters, where she met with current franchisees, technology, and financial support staff. She toured a “brand new, state-of-the-art training facility,” all of which convinced Megan this was the business for her. Franchise Discovery Day will either reel you in with a display of stellar services and support staff or you’ll discover something about the franchisor that sends you to the exit with a feeling of doubt. For example, you may find the CEO has recently changed and you’re not sure about the transition. Or perhaps, you’ll discover you don’t like the support staff. For Megan and Andy, the advantage of a franchise, with all the systems in place to help them through the start-up phase, eventually won out over other options. Megan, 29, who had been working as a manager of a retail store, gave her month’s notice soon after the Franchise Discovery Day. “It boils down to having a world-recognized name and, of course, corporate support,” said Andy Yu, 56, a retired engineer. “We don’t want to get into all these miscellaneous details that will consume all our time and effort.” So, instead of figuring out how to negotiate the best lease agreement, select office furnishings, stationery, and myriad other necessities of their new operation, Yu said, they could spend their time on activities, like sales and marketing, that have more direct impact on the bottom line. They hope to open their new sign-making business by late September. So, how do you prepare? Said Yu: “Do your homework.” Before you even arrive for Franchise Discovery Day, you should:

Do A Comparison Study

Look at a multitude of business types that might suit your experience, interests, and lifestyle.

Read The Franchise Disclosure Document

Federal law requires franchise companies to disclose much useful data, from a list of all their franchises to detailed financial information. Read through this carefully.

Research The Market

You should be confident this business type will work in your location.

Talk To Franchisees

Interview as many as possible to hear about the franchise company’s support systems and how helpful these are. Then, when you get to Franchise Discovery Day, you’re armed with highly educated questions that will enable you to learn if this really is the team you want behind your new business.

Ready to make your dream of becoming an entrepreneur come true? Get your free evaluation today! Contact Dan Citrenbaum to help you create the career you’ve always wanted. As a business coach, Dan brings years of experience helping people select and buy a franchise or existing business. You can reach Dan at dcitrenbaum@gmail.com or at (484) 278-5489.

Franchise Discovery Day: A Franchiser’s POV

When it comes to choosing a franchise, it’s not just your perspective that matters. The franchise company has a clear point of view, as well: They want to see if you can follow their system. While you go through your research, winnowing down your list of possibilities to one, the culmination of the process brings you to Franchise Discovery Day, where you get an up-close immersion with the franchise company —and you find you’re ready to sign on the dotted line or not. The franchiser has a strong interest in making a good match, as well, since franchising ties you together for the long haul. Both of you have a vested interest in the franchise succeeding —you to make a good living and the franchise company to protect its brand name and maximize its own profitability. While we always recommend in-depth research of your own, once you start to focus on a single business, you’ll find the franchiser has a specific process to prepare you, as well. As Troy Thomas, regional vice president mid-Atlantic region of United Franchise Group (UFG) said, Discovery Day “allows the executives with the franchisor a chance to meet and spend a little time with the franchisees to see if it’s a good fit.” And, on the flip side, he said, Discovery Day “allows the franchisee to gain a complete picture of the support network and the value that is typically unseen by a typical franchisee in the field.” The West Palm Beach, Fla.-based firm owns a range of franchises, including Signarama, SuperGreen Solutions and EmbroidMe. By the time Franchise Discovery Day arrives, Thomas said, a UFG executive will have already had meetings with the prospective franchisee, preferably in person, and taken that person through a “four step process.” If it’s not likely to be a good fit, he said, people discover this as they go through the steps. “If you can’t follow the steps, you probably won’t be a good candidate for following the franchise system,” he added. Explained Thomas: “To be successful, it’s not about reinventing the wheel, but rather following the model.” “The best franchisees come from a corporate background so they understand structure, but they have an entrepreneurial spirit and they want to control their own destiny,” he said. “Of course, entrepreneurial types can also be successful franchisees.” Bottom line: It’s about the system. Thomas said they see hundreds of people a year at a Discovery Day, and everyone who comes through gets individual attention. By the time they arrive, they tend to be very interested. “And the vast majority purchase with us,” he added. As a result of this process, Thomas said most of their franchisees are successful. Thomas, who himself as a career-changer, having spent years in newspaper publishing, believes the advantage of a franchise is that it allows people completely new to a business to hit the ground running. “With an independent business, you have to find all your own equipment, vendors, location, hire employees, learn how it all works, figure out your pricing, and that’s before you even sell a thing —a lot of expense and time,” Thomas said. “A good franchise can take you through that a lot faster and give a head start.” So, while you have your checklist, it’s good to remember so does a franchisor —reassurance that the company is working to create the best possible conditions for success.

Ready to make your dream of becoming an entrepreneur come true? Get your free evaluation today! Contact Dan Citrenbaum to help you create the career you’ve always wanted. As a business coach, Dan brings years of experience helping people select and buy a franchise or existing business. You can reach Dan at dcitrenbaum@gmail.com or at (484) 278-5489

Six Essential Skills for Business: But Don’t Sell Yourself Short

Buying a franchise is a great way to reinvent your career, find new satisfaction and higher annual earnings.

When shopping for a franchise, too often people tend to sell themselves short. Instead of finding value in skills gained over the course of a career, they focus on the lack of direct experience in a particular business sector, say retail sales or temporary staffing.

But you don’t want to eliminate opportunities before you have even begun to investigate.

The key is to keep your mind open to possibilities you may never before have considered and inventory your skills to get a truly accurate read on your experience.

Think about all the different skills acquired over a lifetime, both on the job and off.

For example, a plant manager increasingly frustrated at work feared his skills managing a large manufacturing plant with a unionized work force would not easily transfer to franchise ownership. But as he began his research, he realized his experience motivating employees sometimes resistant to instructions, meeting deadlines and working on tight budgets would serve him well. He eventually opened five locations of a fitness franchise and has been enjoying his new profitable career for five years.

Likewise, managing a household develops expertise in a range of areas, including leadership training (PTA), party planning, catering, household systems management and scheduling. Many a successful franchisee started as a homemaker.

Remember, when it comes to franchises, the companies provide extensive training and support to help you transfer your skills to a new business. What you want to have are skills compatible with the new business that will enable you to soar.

We recommend you consult a franchise coach to help you winnow down your list of potential franchises, but first consider the following skills as you do a personal inventory.

Six Essential Skills for Business

Communications

Written a letter or contributed to a newsletter? Spoken to clients or subcontractors on a regular basis? Unless you’re sitting in a back room, doing the books or programming all day long, chances are you have learned a fair amount about how to communicate. But if you feel this isn’t your strong suit, this is an area you could delegate.

Sales/Marketing

Selling yourself is as important as selling a product or service so if you’ve ever had to talk your way onto a board or into a meeting, you know how to sell. If you don’t like dealing with the public, you may want to choose the type of business that practically sells itself with a good marketing campaign.

Management

Managing a classroom or a household is a lot like managing a company. All require knowing how to get the most out of people while keeping them happy and satisfied in their jobs. Franchises tend to offer good employee training.

Organization, Controls

While running a business requires good organization skills, a franchise company’s support usually will help you learn what you need to know. If, on the other hand, things are often spinning out of control for you, you may want to think again before going into business for yourself.

Networking

If your list of contacts is huge and you’re always collecting friends, you likely excel at building relationships and a clientele. While attracting customers is key, so is keeping them, which is best accomplished by delivering the goods.

Public Speaking/Presentation Skills

Lots of careers require public speaking, from sales to teaching. If you think it’s a snap to run a meeting or can stand up in front of a lot of people to welcome them to a party or event, you’re good to go. A whiz at Powerpoint? Even better.

Don’t worry if you haven’t checked each one, the main skill you need is the willingness to work hard over an extended period of time and do your homework. Of course, you also need perseverance and a little hard-headedness to keep you going. You do yourself credit when you recognize your strengths, as well as your weaknesses. So follow your passion because you’re in it for the long game.