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Franchisee Validation Call Guidelines

 

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1. Value their time

It’s unlikely that the owner will answer the phone and be available to speak when you call for the first time. Be sure to state that you realize they are busy and appreciate their taking the time to speak with you. Ask them to suggest a convenient time for you to call when they have 15-20 minutes to give.

2. Be persistent

You may have to leave a message or two before you get a response. These people are likely to be busy running their business, managing a family and social life, travelling, etc. You’ll probably have to call a few times before you connect. Vary the time of day that you call; change up the message you leave on voicemail. Try email as well if you have their email address.

3. Remind them what it was like to be in your shoes

“I’m sure you can recall what it was like when you were going through this process. Thanks for taking the time to help me learn more about this business.”

4. Gain credibility

Introduce yourself as a prospective franchisee and mention the name of the Franchise Development Representative from the corporate office you are working with. Some systems will even provide you with a password – owners want to be sure they are speaking with legitimate franchise prospects and not being shopped by the competition.

5. Build rapport

Warm them up with a couple of softball questions before escalating to the financial questions. This will help you gain insight into the culture of the franchise system – are these the kind of people you want to be around?

6. The good, the bad, and the ugly

Be sure to speak with a sufficient number of franchisees to get a broad sampling of experiences. Though ideally the overwhelming majority of franchisees are happy and supportive of the franchisor, it is also valuable to hear from a dissatisfied franchisee. While it’s useful to hear their complaints, try also to determine what makes this franchisee stand apart from the rest. If you find yourself identifying more closely with the franchisees who speak positively of the business, that is a good sign.

7. Beware of the NIMBY

NIMBY stands for Not In My Back Yard. You will undoubtedly come across some owners who are not interested in or excited about having a new franchisee enter a neighboring territory. They may fear competition and/or have their eyes set on expanding into that territory themselves. They may try to scare you away or push you to another market. Take the immediate neighbors’ comments with a grain of salt, as they may not have your best interest at heart.

8. Talk to owners at various stages

Depending on the age and size of the system, do your best to connect with owners that are: a) fresh out of training, b) a year or two old going through the building stage, and c) mature owners that are 3+ years into their franchise ownership. You need to hear about a cross-section of experiences in order to draw educated and informed conclusions.

9. Participate in validation conference calls

Many franchisors assist with this process by setting up weekly conference calls hosted by franchisees. You’ll find this to be more prevalent with new, emerging concepts where there are not as many franchisees to validate. They are overwhelmed with phone calls and their time is precious. This allows them to speak with several prospective candidates at once and maximize the use of their time. You will also benefit from hearing what other prospective candidates are asking and what is important to them.

10. Ask for their email address

It is often easier to ask follow-up questions via email rather than playing phone tag again and trying to get them to commit to another call.

Remember, validation is a part of the investigation process that offers a wonderful opportunity for you to get a feel for the culture, competence, and owner perception of the franchise company. It is also a chance for the franchise company to consider how their owners perceive you as a potential franchisee – so allow these conversations to reflect you at your very best!

SAMPLE VALIDATION QUESTIONS TO ASK FRANCHISE OWNERS

The following outline is meant as a starting point for you to develop your own list of questions. Depending on the franchise you are investigating, some of the questions may not be relevant. You will also likely have additional questions to add that are important to you.

Background:

  • What type of work did you do before you got into your own business?

  • Why did you decide to leave that to go into business for yourself?

  • Why did you choose this franchise?

  • When did you open your franchise?

Day in the life:

  • Tell me about your typical day in the business. How did this change from the start- up period to the more mature stages?

Initial training and ongoing support:

  • How well did your initial training prepare you for opening your business?

  • During your start-up phase did the franchisor provide you with the support you needed and expected? (Ask them to share examples.)

  • How has the ongoing support been?

  • What do you find to be the most valuable part of the ongoing support?

  • Is the franchisor responsive to your calls and requests for assistance?

Real estate process: (for brick and mortar franchises)

  • What did you think of the assistance you received during the site selection, lease negotiation, design, and construction processes?

  • How long did it take you to go from signing your franchisee agreement to opening? Why?

Marketing programs:

  • What is your customer actuation strategy? What is your customer retention strategy?

  • How effective has your overall marketing strategy proven to be?

  • What role does the franchisor play in the marketing strategy?

  • Who do you see as your biggest competitors in your area?

  • How do you differentiate, and what are your competitive advantages?

Purchasing power:

  • Does the franchisor use the collective buying power of the entire system to obtain discounts on supplies and/or inventory? Can you give examples?

Employees

  • How many employees do you have?

  • How do you attract and retain them?

  • What are the biggest challenges with employees and how do you overcome them?

Franchisee/Franchisor relations:

  • How would you describe the culture of the franchise organization?

  • Is the franchise company supportive and caring about you and your operation? What makes you say that?

Initial investment:

  • What was the total amount of your initial investment to launch your franchise?

  • Was this higher or lower than anticipated? Why?

  • How long did it take you to get to cash-flow positive (where your revenues exceeded your expenses)? Was this on target with your projections?

  • Looking back, is there anything you could have done differently to lower the initial investment or speed up the time it took to get to cash-flow positive?

Earnings:

  • What were your goals and expectations for annual revenue this past year? Did you reach them?

  • What was your annual net profit out of that revenue?

  • If you have been open for several years, has this been fairly consistent with prior years?

  • Can you tell me about your initial start-up? What were your goals and expectations for annual revenue and profitability in Year 1, Year 2,Year #? Did you reach them?

  • What has the greatest effect on your annual net profit?

  • What separates the higher performers from the lower performers in your franchise system?

Closing questions:

  • What are the greatest rewards of owning a _____ franchise?

  • What are the biggest challenges?

  • What advice do you have for me as I determine whether this franchise is the right fit for me?

  • If you had to do it all over again, would you decide to buy a ___________ franchise again? Why/why not?