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6 Steps That Help You Know If a Franchisor Is “The One”

You’ve built your model, narrowed your options to a franchisor that meets your criteria, and made initial outreach to that company. Here’s what will happen next:

  1. Dive deep. The franchisor will immerse you in the business, setting up meetings to introduce you to key franchisee disciplines, including marketing, business development, technology, training, and real estate.

  2. Read the fine print. Every franchise in the United States is legally required to provide a Franchise Disclosure Document (FDD) no later than 14 days prior to signing a franchise agreement. Your FDD review and understanding is a significant part of the research process. This document explains the responsibilities of the franchisee and the franchisor. What you discover in a company’s FDD – including investment parameters, pending litigation and regulatory issues – can help you weed out franchises that don’t measure up.

  3. Gather insights. You want to gain insights from current franchisees to get their input on the business. Between 5 and 8 franchisees is a good, representative sampling. If the majority of them are happy and profitable, that’s a great sign. For those who are not, probe to find out why.

  4. Frame out a business plan.  It’s time to build cash-flow projections to validate the franchise’s ability to meet your professional and financial goals.

  5. Put a face to the brand. The “deep dive” meetings will give you lots of good information, but nothing can replicate the insights you collect in a face-to-face meeting. In franchising, we call this a “Discovery Day,” and it’s the time when you physically meet with franchisor representatives in person to finalize details, work through concerns, and gauge the all-important “vibe” of the business. Is the business as excited about you as you are about it?

  6. Decide! By now, you have all the information you need to make an informed decision. Remember to take into account the model that you’ve created, which integrates your ideal business characteristics and financial requirements. Does this franchisor match the model? If not, it’s time to move on. If so, it’s time to move forward.

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