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Franchise Opportunity - 5 Considerations
By Dennis Schooley, Wed Dec 7th
Franchise Opportunity - 5 Considerations In addition to the many questions that you should pose to apotential Franchisor, and the many questions they should pose toyou, there are several other considerations for you to determineyour compatibility with a particular Franchise system. If youare going to be getting into business with someone with the goalof creating an outstanding future together, you should covermore bases than just the basic questions to understand how thebusiness makes money. That will be ultimately important ofcourse, but several general considerations will be imperativefor you to analyze as well, if you really want to understandyour potential 'strategic-partner'. Franchisor's Qualification System
One of the initial things you should strive to understand is thelevel of development that the Franchisor's Candidatequalification system has reached. Your first reaction to thatmight be 'Why do I care about a Franchise Qualification system -I only care if I get a Franchise or not?' I would suggest thatyou should care a great deal. After all, if the Franchise Candidate qualification systemhasn't been well developed, it may be a reflection on thebusiness of the Franchise itself. The most important asset ofany Franchise system will be its people, including bothFranchisees, and Franchisor staff. Almost all companies willconfirm that to be the case. They say it even if they don'tbelieve it. They say it even if they don't actually put systemsin place to ensure they add the best people, and nurture theirdevelopment over time. So how do you determine if the statementmatches the execution? If people are the most important asset, it would follow that thesystem of finding, qualifying, and granting Franchises to thebest Franchisees would be a well thought out and well developedsystem. If there is no formal step-by-step system to provideinformation to both parties then it may be an indicator thatthere is something amiss. A good system will be able to provide you regular information tohelp you make an informed business decision about joining as aFranchisee. It should also provide the Franchisor withinformation about you to help them make an informed decision aswell. That decision should be whether you qualify as someonethey can describe as one on their 'most important assets'. If the system doesn't allow for a step-by-step, give and take,system of information flow, then perhaps the other businesssystems within the Franchise aren't as well developed asrepresented either. The information system shouldn't be so fastthat you are overloaded, but it should be steady enough that youcan continue to assess, and deliver information, at a pace thatmakes sense for both parties. If the system is too fast, for example if you are givenDisclosure Documents within the first week of the due diligenceprocess before many other things are assessed, I would suggestthere is something wrong. To rush is to err. On the other hand,if the system is too slow, you won't get a true flavor for thecompany because of the sporadic nature of the flow. Culture isimportant, and a steady flow of data will give you a better feelfor the culture of the business than trading information everythree weeks for a six-month period. If you are not looking tomake a decision with 30 to 120 days, I would suggest that youwait until you are to that point before you engage fully in aFranchise Qualification system. That doesn't mean that you needto be in business in that timeframe, only that you would like tomake a decision in that timeframe. Some systems will include a step-by-step system where you willreceive information from the Franchisor, and then you will berequired to provide some information to them. Once you providethe information, then the Franchisor will send you additionaldata to help you gain more intimate knowledge...and so on. Thereason for that type of system, which I would judge to be ideal,is that each of you is illustrating commitment to the process.This is an important factor for the Franchisor to determinebecause it is a great indicator to them that you will be able tofollow and use a good system to your advantage. That's whatFranchising is all about. The Franchisor has invested asignificant amount of time and money to develop a proven systemthat is designed to earn all stakeholders a maximum return.Therefore the Franchisor must determine that each new Franchiseeis willing and able to follow a good system. What better placeto start than the basic evaluation system. In today's world, that system should use various media tocommunicate with you including email, telephone, mail orcourier, Internet, in person etc. Again, this will demonstratethe Franchisor's use of current technologies and methods toreally get to know you, and to stay current in an ever-changingglobal environment. If the Franchisor does not have a good step-by-step informationflow and due diligence system then that alarm bell in your headshould go off. Communications with Existing Franchisees One of the most important sources of valuable information willbe the existing Franchisees. The Franchisor's system shouldinclude available exposure to all of the Franchisees. First ofall, in most jurisdictions where Disclosure Documents arerequired, one of the required disclosures is a full list of allFranchisees, including contact information. If you get a feel that a Franchisor is discouraging you fromcommunicating with certain Franchisees - well, there's thatalarm bell again. That's not to say that all Franchisees will be happy, or thatall will be great operators. In fact, most systems havedisgruntled or unsuccessful Franchisees. It will be importantfor you to speak to the top echelon, the middle range people,and the poor performers. The test should be to identify thefactors that differentiate the groups. Then determine how youare more like the successful people,
and how you are not likethe unsuccessful people. The most important point is that the Franchisor has a system toallow efficient access to all Franchisees. Some Franchisors willprovide email questions to send to all Franchisees plus ask youto call your own sample from the complete list. Others willprovide for conference calls with several Franchisees. Otherswill provide for Discovery Days including existing Franchisees.Of course, conference calls and Discovery Days will include'favorable' Franchisees. That doesn't mean those processesaren't very helpful - you just have to realize who you'redealing with. Other Franchisors will ask you to talk to people in yourgeographic area. Or people with a similar background. All ofthese things make sense, but you must ensure that you also havethe ability to communicate with any existing Franchisee, and notjust the suggested sample. You will be able to judge theFranchisor's openness through their reactions in this process. Responsiveness This one is fairly simple but very important. If the Franchisorresponds to your inquiries quickly and efficiently, it'sprobably a good indicator of the type of responsiveness thecompany executes as a whole. Of course, that becomes veryimportant when you require support once you become a Franchisee. If a Franchisor takes several days to get back to you after yourinitial inquiry, you should take that as a warning sign. If theydon't respond in an efficient and professional manner to youremail and telephone inquiries as you go through the process, itprobably means they are not running a tight ship. A system that responds almost immediately, and then starts youon a step-by-step information flow, including personal contact,should be what you are looking for in terms of responsiveness. Face-To-Face Meeting The system of evaluation for both parties should include aface-to-face meeting. After all, you are trying to determine ifyou want to get into business together for 5, 10, 15 or moreyears. If a Franchisor wants you to join the system without aface-to-face meeting, it doesn't really make sense. Would youstart a partnership business without meeting your partner? AFranchise is not an actual partnership, but the same criteriashould apply. It should actually apply to the Franchisor everybit as much as to you. So if that meeting is not part of theprocess, the system is incomplete. There are several ways for the face-to-face meeting to takeplace. Many Franchisors have development personnel that willmeet you in your community or a convenient location for bothparties. Some Franchisors require a head office visit. Otherswill host Discovery Days, either at their head office or on aregional basis. All of these methods are fine, as long as youhave some time for some one-on-one interaction. I once asked a mentor of mine when our company was firstbeginning to offer Franchises, about the best method todetermine that 'right' match. He said to me that the ultimatetest is whether you would be willing to have the person over fora barbeque in your backyard. Of course, there are many otherfactors, but his point was that it should be someone that youwould like to be in business with, and would enjoy their company. The face-to-face meeting should also include an invitation foryour spouse to participate. In fact, some systems require thespouse to be in attendance. Again, it is sensible to includespouses at the discovery stage because the ultimate decision tostart a new Franchise business will be focused on buildingfamily dreams, and providing family security for the future. Ifa spouse is not fully aware and comfortable at thedecision-making stage, it could create difficulties down theroad as you build the business. The main point is that if a face-to-face meeting is not a partof the process, and your spouse is not welcome to attend, theprocess is faulty. Unified Thinking I'm not going to spend much time with this point at this stage,other than to say that the entire process of due diligence, forboth parties, should be about determining whether there isunified thinking. My counsel is to step back at the end of theprocess and ask yourself the following question: Did the processhelp both parties to determine if they have unified thinkingabout the business at hand? If the answer is not yes, thenyou've either got more work to do, or something with the systemis not right and you should examine alternatives. Franchising is about finding the right strategic-partnerships toallow both parties to prosper at a higher level together thanthey would if they were not to enter into an agreement to dobusiness together. You must be comfortable with the concept itself.It's the Franchisor's strategy to penetrate and dominate amarketplace. You've got to be comfortable with the Franchisor'sstrategies to do just that. If they make sense to you, it can bea great ride in achieving success together. You should assess your needs, wants and desires to make surethat they can be met with a successful Franchise in the system.You should bring to the surface all of your fears,uncertainties, and doubts to determine if you can solve themwith the business and the future you can create. The worst thingyou can do is leave them buried. Finally, can you see yourself reaching your goals, dreams andobjectives by operating a successful business in theFranchisor's system? Will the Franchise help you to achievethose goals and dreams? To receive a free copy of an E-Book titled 'FranchiseOpportunity - Making The Right Decision' by Dennis Schooley,email that request to corp@schooleymitchell.com.
About the author:Dennis Schooley is the Founder of Schooley Mitchell TelecomConsultants, a Professional Services Franchise Company. Hewrites for publication, as well as forschooleymitchell.blogging.com and franchises.blogging.com, inthe subject areas of Franchising, and Technology for the Layman.http://www.schooleymitchell.com, 888-311-6477,dschooley@schooleymitchell.com.
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