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From Joe and Mike.
December 2014 Archives
Some prospective franchisees admit they do not know what to ask existing franchisees, and others say they know what they'd like to ask, but they don't know how. Don't let either scenario stop you from thoroughly investigating a franchise opportunity. Here are 4+ questions to ask, worded in a way to help you get the information you need.
#1 "As an existing franchisee, knowing what you now know, would you buy this same franchise again?"
Some experts will tell you never to ask Yes/No questions, but in this case you must because you want a definitive answer. If you ask ten franchisees of the same brand that same question you want to add up the "yeses" and "nos" at the end of your interrogation and decide if this is a franchise you should buy. If the majority of existing franchisees tell you "no" then you probably need to look for another opportunity. There could be exceptions, but you'll want to understand what they are before you go ahead.
The answers to Question #1 logically lead to other questions. Whether the franchisee says yes or no, ask: "Why" If the franchisee answers no, ask "Under what circumstances would you change your answer to a yes?"
The answers to Question #1 logically lead to other questions. Whether the franchisee says yes or no, ask: "Why" If the franchisee answers no, ask "Under what circumstances would you change your answer to a yes?"
#2 "Do you find the business as satisfying today as you did when you first got started?"
Satisfaction is an important consideration in the life of a franchisee. In fact, many people explore franchise opportunities to get away from an unsatisfying job. But in this case, you'll pay a fee to go to work. Do you really want to work at something that you don't find satisfying after a year or two?
It's another Yes/No question, but again the answers lead to other questions: "What happened to change your degree of satisfaction?" . . . "What could you or the franchisor do to make the business more satisfying?"
#3 "What's the secret to the success of the top franchisees?"
It's an open-ended question that can reveal important facts for you to consider. For example, if the franchisee answers, "Location!" you need to zero in on where to open your franchise. If the answer is "sales skills" or "management skills" or "accounting skills" you need to evaluate your own skills, or your ability to hire those skills.
Of course, if you're not questioning a top franchisee, you may get the wrong answer! That's why you should always ask the franchisor to give you a list of the top performing franchisees, i.e. the franchisees who won awards at the last three annual conventions. (A franchisor that won't do that or can't do that may not be worthy of your consideration).
#4 "If I invest the money the way the franchisor suggests (i.e. in training, advertising, location, etc.) and I work the business as well as you have, how much money can I expect to earn my first year as a franchisee? The third year? The fifth year?"
That's what you really want to know, isn't it? "How much money will I make?" The franchisor probably won't tell you, but the franchisees will if you ask in a non-invasive manner. If you're expecting to earn six figures annually, but no franchisee ever has with this brand, you need to know that upfront. It may mean you'll have to buy more than one unit to meet your financial goals.
While these are some of the questions you should ask existing franchisees, you'll find more in my book 101 Questions to Ask Before You Invest in a Franchise.
If you are a franchisor (or prospective franchisor), I know for a fact that right now you are all atwitter regarding the following concepts:
1) Franchising is a "low-risk" business model wherein the franchisee takes the majority of the risk.
2) You can make good money without having to invest significant capital in a bricks-and-mortar operation.
3) You can create a flock of "golden geese" that will eventually be-come the greatest annuity ever.
4) And--if you're already a small-business owner--you love the fact that you can grow your empire by leveraging the passion and en-ergy of other entrepreneurs who are just...like...you (you hope).
For you franchisees (or prospective franchisees) out there, your brain is preoccupied with champagne wishes and caviar dreams.
You're most likely rabidly passionate about dog grooming or the art of sandwich making or the magic of dry cleaning, or whatever floats your boat. You are obsessed with the idea that for the (relatively nominal) cost of a franchisee fee, you will be magically anointed with the "secret formula" that will guarantee your success and deliver you from evil.
You believe in your heart of hearts that you are way smarter than those other poor saps who tried to start a small business without the loving protection and guidance of a benevolent and all-knowing franchisor.
And last but not least, you firmly believe that franchisors always put their franchisees' best interests first, and that their primary reason for existing is to ensure the health, happiness, and well-being of their franchisees. Behind The Franchise Curtain
Well, guess what? I hate to rain on your parade, but like most things in life, it ain't that simple.
As a matter of fact, the dirty little secret that many in the franchising community don't want you to know is that operating a franchise (as either a franchisee or a franchisor) is actually much harder than it looks, and probably much harder than you ever imagined.
