I meet with a lot of franchisees. Some passionate, some worn out, some disillusioned and it makes me wonder… “What has been the difference in their journeys?”
After all, they have all bought into a franchise system, a system that is proven. A system that has support mechanisms built into it to help the franchisees along the way. But why is it that some people earn a respectable living and some don’t and in the process experience the three common problems of a franchisee – no time, little money and a clueless team.
One common factor I have found is that the disillusioned franchisee failed to do extensive due diligence. They didn’t know what to ASK? They didn’t know who to ask and for that matter even if they did find someone to speak with, what questions should they be asking.
There are many aspects to consider when buying a franchised business and you, the buyer, are usually rushed along in the process. The franchisor has a time plan and process, the franchise broker can smell the commission so they are in a hurry to make the sale and all too often the prospective franchisee just ends up signing the paperwork in all the rush and bustle and this is where the disillusion starts.
If you are wondering where you should start your due diligence, there are really only three stages to research over three areas – 9 steps in all.
You have to consider
- the franchise system you are buying into,
- the business case that you are buying into
And most importantly you must consider whether
- YOU are a fit with franchising and the brand you are buying into.
In each of these stages, you must ASK
- Appraise the franchise system and the Franchisor, the business case on the table and what is required of you
- Seek professional advice from lawyers, accountants and franchisee mentors, find past franchisees and speak with them about their experience; educate yourself on franchising and business; and seek out your support team
- Know all about the documents you are signing, the business case you are buying into and the skills and abilities you require to run the business before you sign anything
I know it sounds confusing so check out my specialised ASK method to completing the Due Diligence process
It is imperative that you do extensive due diligence and that you are not rushed in anyway because once you are in the system it is usually the length of your lease and/or your franchise agreement before you can get out without penalty.
High Performance Franchisees all have three things in common
- they entered their system fully informed,
- they considered many opportunities before they found the one they were comfortable with. The one that was a fit for them.
- they entered the system knowing what Key Performance Indicators (KPI’s) they had to meet from day one to enjoy success in their franchised business.
Remember, buying into a franchise is a huge financial commitment, you can never ask too many questions. You wouldn’t buy a home without a building inspection; therefore you shouldn’t buy a franchise without speaking with a franchisee mentor, someone with YOUR interests at heart.