Your Franchise Company Investigation Begins with a Step By Step Process—And We Make It As Simple as Possible

Choosing the right franchise can be an overwhelming decision, especially if you’re not sure how to go about it.  Here at The Franchise Connection we simplify the process.

We built an individual model that you can use to see if a franchise opportunity is right for you.

By crystallizing your objectives for owning a business we can pinpoint a handful of businesses that match your profile and offer excellent opportunities in your preferred geographic areas.

The end result is a clear picture of what the future will be like for you as a business owner.

Now you just need a process to investigate these individual franchise companies and determine if they fit perfectly into your plans.

The first thing to remember is that this is a process for both you and the franchisor. The Franchise Connection (TFC) will introduce you into each franchise company with a warm handshake.

Preparation is everything, and TFC will thoroughly prepare you before that first introduction.

It’s these expert guidelines and tidbits of information that will present you in the best light with that Franchisor.  If  this Franchise Company is a great business fit for you then we’ll put our best foot forward to impress that executive in the franchise company.

Our introduction of you adds value in the long run, since our reputation in the industry is stellar, and the Franchisor respects our qualification process and is anxious to interview the candidates we bring them.

In fact, people attempting to reach the Franchisor direct, without our help, often NEVER get to the inside executive level that TFC has a direct hotline to.   In most cases TFC has the cell phone numbers of the key franchise personnel.  That’s why we are called “The Franchise Connection”.

OK Fasten Your Seatbelt, Here are the 6 Steps

Step 1 – General Information

The franchisor will begin by providing you with overview information on the company (typically a brochure and video package). They will then ask you to provide them with additional information on you (by filling out a questionnaire) to determine if you have the general characteristics that they are looking for. Assuming that each party is still interested, based on this information exchange, you will proceed to the next step.

Step 2 – The Franchise Disclosure Document

This document, commonly referred to as the FDD, is the F. T. C. mandated disclosure document that gives you a wealth of information about the franchisor.

The form and composition of the document is standard with any franchisor and must include information on a variety of topics of interest to you. The major subject areas include:

• The history of the franchise and its officers and directors.
• A complete description of the business to be franchised.
• All costs and fees that you will be subject to under the agreement.
• The obligations of either party to the other during the term of the agreement and thereafter.
• Any relevant litigation history of the company or its officers.
• Any business failures, ownership transfers, franchise agreement terminations or other potentially adverse information relating to the success rate of the existing units in the system.
• Audited financial statements for the franchise company for the previous three years.
• A list of the existing franchisees.

A few franchisors also include an earnings performance claim in the FDD, which can be a real time saver for you. Even if it is included in the FDD, it is still imperative that you discuss this subject with franchisees during your fact-finding calls and visits.

Then it’s time to carefully review the FDD document and note any questions or issues that the material raise for further discussion with the franchisor. You may also want to involve outside advisors to review material you are not familiar with.

Step 3 – Franchisee Calls and Visits

The most valuable source of information on any franchise system is the existing franchisees. You should plan on calling or visiting a number of the existing franchisees during your investigation.

You will probably find that the attitude of the existing franchisee on any issue will almost certainly be your attitude on the issue as well if you decide to become a franchisee.  That’s why this part of the process is so important.

This next part might seem odd, but it’s helpful if you actually find an unhappy franchisee during your investigation. When this happens, put on your detective hat so that you not only listen to the complaints but also try to determine what makes this franchisee different from the rest.

If you find you identify with the positive ones and feel the negative franchisee is not at all like you, then you should be fine.

BUT, if you find that you are more like the person who is unhappy however, this is probably not the right franchise for you.

Here are the areas to investigate during these calls:

Training Programs

How well do the initial training programs and support prepared the franchisees for opening and running their business?

Opening Support

How easy did the franchisor make the process of getting the first unit open and operating?

Was there assistance in site selection, lease negotiation, construction and design assistance, financing assistance, permits or any other factors unique to getting this business up and operating?

Ongoing Support

How effective were the ongoing support services of the franchisor in terms of helping franchisees deal with the problems that come up in the running of their business?

Marketing Programs

Most franchisors collect marketing dollars from every franchisee into a pool that is spent to promote the brand. You need to know whether the franchisees are happy and supportive of the way this process is handled. Note: this is typically the area where you will find the most complaining in any franchise you examine.

Purchasing Power

Does the franchisor use the collective buying power of the total system to get discounts on supplies and inventory beyond what an independent operator could achieve? This factor is one of the biggest advantages of joining a well-run franchise system and should offset much of the fee cost associated with being a franchisee.

Franchisor/Franchisee Relations

Determine what the franchisees feel about the franchisor in general. Is the franchisor supportive, caring, focused on their success, responsive, effective, organized, and trustworthy? Make sure you have a good feeling about the values of the organization and that they are consistent with your values.

Investment

The FDD will give you a wide dollar range for the investment required in the business. Use the franchisee discussions to narrow that down to a reasonable and conservative estimate of how much capital you will need to be successful in this franchise.

Earnings

It is critical that you have a strong sense of just where the average unit is in terms of earnings. You should know the answers to the following questions:

How much money does the typical unit make given a specified length of time in business?

How soon does a typical unit start making money after opening?

What is the range of answers for these questions?

If you are simply not able to determine these answers to your satisfaction in your research, do not settle! Tell the franchisor of the problem and that you cannot proceed unless you have these answers.

It is always a good idea to bring up the subject of earnings as the last point in your franchisee visits. Most people are reluctant to discuss their income with strangers and you will find the franchisees are more willing to cover this subject after you have spent some time visiting with them.

Step 4 – Review the System Documentation

A strong franchise company will have documented their systems, operations and marketing programs in a concise and easy to use format for the reference of franchisees.

The franchisor will probably not give you a copy of their actual manuals, but they can provide you with the table of contents or index of every support manual they have. This will enable you to confirm that the documentation exists and will show the scope of the coverage of all their major business factors.

Step 5 – Meet the Franchisor

At some point in the process of investigation, you will want to have personal meetings with key personnel of the franchise company. This might be possible in your local market or you may need to travel to the headquarters of the franchisor.

Many franchisors facilitate this need by holding what are referred to as “Discovery Days”. These are structured events where you can go to a specified location and know that all of the key people from the franchisor will be available.

Find out who the go-to person is for operational support and training and decide for yourself if they’re up to the task. Make sure that any remaining questions or issues you may have are addressed at this meeting.

Step 6 – Make a Decision

This is it!

Your investigation is complete, usually in about 2 to 4 weeks, and you should have all the information you need to determine if this franchise is right for you.

Use the model we developed to evaluate what you wanted in a business.  If this company has everything you wanted, do it.  Get started building your business empire.  If it doesn’t, eliminate it and with the help of TFC go on to the next one.

Contact us now to begin the process!

The Franchise Connection Tammy Dias, President/CEO Toll Free: 1.888.943.8249 Email:  info@yourfranchiseconnection.com