Questions to Ask During the Franchisee Validation Process

questions to ask a franchisee

Your Guide to Franchise Ownership

There is an estimated 775,000 franchise establishments in the U.S., and that number continues to grow. Why? Because the franchise model works! By leveraging a proven system, support and training, you can step right into a franchise business much more seamlessly than starting from scratch. But you have to do your due diligence... and that's where the IFPG Franchise Buyer's Guide comes in.

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Potential Franchise Owners Can Gain Valuable Insights From the Franchisee Validation Process

The franchise investigation process allows prospective franchise owners to vet a franchise to determine if it is a good investment. This investigative process usually has three steps: foundational calls, franchisee validation, and discovery day. During the franchisee validation portion, the prospective franchise owner can speak with franchisees in the franchise system, giving the candidate a greater understanding of what a franchise is like.

These business owners have already made the leap into franchising, so their experience and knowledge are invaluable. While there are many questions that you may want to ask, it would be wise to ask a few specific questions that will allow you to get the most out of your time. 

Here are some questions to ask during the franchisee validation process:

What was Your Experience with Site Development?

In business, it’s all about: location, location, location. This is especially important for franchises that have retail brick-and-mortar locations. Use your time to ask a franchisee about the franchise’s site development assistance. The location can be a make-or-break decision.

What is the Average Time to Open a Location?

After signing a franchise agreement, an agreed-upon amount of time is required to open your location. Ask follow-up questions to the franchisee to see if this process was completed in the agreed amount of time.

Has Staffing Been Difficult for You?

In business, staffing is one of the most critical factors in success. But finding great employees and managers isn’t always easy. It is good to know if other franchisees had difficulty finding talent.

Do You Own Multiple Locations?

A good business owner is goal-orientated and already has an idea if they want to own multiple locations. While it is a positive development if the franchise offers multiple unit deals, ask follow-up questions if they’re not. Having multiple locations adds revenue to your business.

What was the Biggest Challenge You Experienced in Your First Year?

In the first year of a business, the possibility of failure is highest. It is critical to ask franchisees about their difficulties as it can help you avoid unforeseeable circumstances if you decide to go with the brand.

Did the Franchisor's Training Set You Up for Success?

An advantage of investing in a franchise is that the franchisor provides you with support and training, which isn’t the case when you start a business from scratch. While there is no guarantee of success in franchising, the best way to ensure success is to follow the working system and training that is provided. If the training is helpful and leads to success, that franchise could be for you.

Were There Any Pleasant Surprises in Opening This Franchise Business?

The opening of a business can be nerve-racking, but it’s not all bad. It is important to get the full story from franchisees about their experience with business ownership, good or bad. This will allow you to appreciate the successes and failures when they come.

Is the Corporate Team Responsive and Supportive?

In a franchise system, the franchisees can expect a corporate team to be there to respond to questions and concerns that they may have. Franchisees in the system will let you know what to expect when you need support from the franchisor, which usually includes site selection, site construction, and providing marketing materials and ongoing support as time goes on.

How is the Corporate Culture?

In addition to providing the public with a product or service, a franchise also has a corporate culture that comes with it. The founders of a franchise have certain values and beliefs that can make a franchise enjoyable or unenjoyable. By asking another franchisee what the culture is like, you can determine if the franchise aligns with your personal values and beliefs. If the brand goes against what you stand for, you may have to look elsewhere.

Do You Have Any Regrets?

As a franchise owner, you will make mistakes. Whether the mistakes are big or small, you have to deal with them and try to fix them while not obsessing over them. When you ask a franchisee about their regrets, you can use it as a way to not make the same mistakes and find out how happy they really are with the business.

Are You Aware of Any Unhappy Franchisees?

As a prospective franchise owner, knowing if the other franchisees in the system like the business are important to consider. While not all franchisees answer this question honestly and not everyone in the system of a franchise business is always happy, listen to how they answer your question and ask it multiple times to get a better picture.

Do You Have Any Previous Business Ownership Experience?

One of the benefits of owning a franchise is that you don’t necessarily need previous business experience to be successful. This is because franchisors will provide you with support and training. But, having prior experience doesn’t hurt at all, and if franchisees have similar experiences as you can better see yourself as a franchise owner. You can also ask how long they are running their franchise business to get a better sense if the company is worth your time and money.

Is Owning a Business Right for Me?

While franchisee validation is an important part of the due diligence process, you should speak with a franchise consultant before you even get this far. A franchise consultant is a professional who works with you to determine if owning a business is right for you. They do this by meeting with you and discussing your background, financial situation, skills, and background. Based on this information, you meet with franchisors who align with your values and have a franchise business that is within your financial reach. 

With their deep knowledge of how to buy a franchise, consultants help you better understand the franchise cost and important documentation, like the Franchise Disclosure Document (FDD) and the franchise agreement. After reading through the FDD, you will know if the franchise business has any red flags. These red flags include when a franchisor fires many franchise owners and doesn’t disclose item 19, which tells investors how much the average franchisee makes annually. The FDD also includes the registration states where you can buy a franchise and tells you how many franchisees in the system have filed for bankruptcy.

Due Diligence

Since consultants only make a commission from franchisors when entrepreneurs buy a franchise, their advice comes at no cost to you. If a franchisor believes that you have what it takes to be a franchise owner, you’ ll be invited to the corporate headquarters for discovery day. During this event, you get to vet the franchisor and the brand's leadership team. Discovery day, the franchisee validation process and foundational calls will give you a sense of what a franchise business is about and can make or break your decision to buy a franchise.

When narrowing down questions to ask during the franchisee validation process, make them specific in order to get the most out of your time with the franchise owner.

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