Speak with Existing Franchisees Before Buying a Franchise
As mentioned in my previous article Franchise Due Diligence: An Insider's Look, I was seriously considering purchasing a franchise business and had narrowed down my choices to two very solid franchise models: Doc Popcorn, a specialty gourmet snack business and Young Rembrandts, an art enrichment afterschool business with a 20-year history.
At the heart of any successful franchise evaluation is the process where you contact existing franchisees to learn firsthand about their experiences in the franchise system as business owners. This phase of the evaluation typically begins after you have spoken with a representative from the franchisor and had at least one in-depth overview of the business. The key to a great evaluation is to plan your approach and work your plan! So here are some of steps I used to determine franchise ownership:
- Never contact franchisees until the franchisor authorizes you to do so. I want the current owners to be comfortable with my questions and know I am seriously exploring franchise ownership within their system.
- Follow the approach prescribed by the franchisor. It's designed to maximum your due diligence while respecting the time of the current owners.
- Don’t be afraid to ask for names of franchisees who profile like you. For example, in my case, I wanted to know who in the system had a similar background to me.
- If you want valuable answers, you have to ask good questions. I ask specific questions about their goals, strategies, exit plan and if they received all that was promised to them during their due diligence.
I've reached a point of final decision. The decision should be a fairly difficult one if you've followed the steps I've outlined in my articles. My decision is I will not be moving forward with either franchise model. My reasons are more personal than professional and that's OK. The franchisors who value integrity and who I have built good will with understand and will always leave the door wide open to qualified, sincere and motivated candidates.
