Step 3 – Become a Student
The third step is franchise research. Each of targeted franchise systems will have a franchise exploration process designed to educate you regarding their concept. Seeing as this is a mutual elimination process, it is important that you follow their system – this way they know you can be a team player. At the same time, it is critical you know what you are doing and make sure you cover all your bases. That is where we can help. …
The due diligence process can be divided into three parts.
Part 1 – The first part is a series of calls with the franchisor in order to learn the foundational principals of the franchise system. Each call with the franchise representative will cover a different topic. Topics include marketing, operations, labor, real estate and the FDD. These calls will educate you regarding the quality of the franchise infrastructure and systems. If you are interested in a list of questions to ask franchisors – click here.
Part 2 – The second part of the franchise due diligence process focuses on multiple calls with franchisees. Once the franchisor gives you permission, you will be able to interview franchisees and ask them any question you want. They are not required to speak with you but when they do, you will find them to be exceptionally open and honest. This is also the stage where you will build the complete financial model of the business. If you are interested in a list of questions to ask franchisees – click here
Part 3 – The last stage of the due diligence process involves an opportunity to meet the franchisor staff and support people. This is the part of the process where you are able to look the franchisor in the eye and determine if there is a potential for a long term, trust based relationship. Often this day is called Discovery day. Most franchisors schedule these days once a month for all candidates. In other situations, the franchisor may hold the Discovery Day’s on a one on one basis. Either way, it is important for everyone to meet each other.
Important – During this entire process, we will be there for you. We will speak every week and more often if needed. During each call we will review what has been accomplished, answer your specific questions, and provide specific coaching and guidance regarding the next steps. You should never be surprised or unprepared during the due diligence process. There is a system to investigating and franchise and, if followed, you will know everything you need to know before making any decisions or commitments. Our mission state is over a decade old and reads as follows – ‘To create educated franchise buyers that have clearly defined objectives and are able to recognize the right, or wrong, franchise when they see it. Ideally an educated franchisee will move into the franchisee role with their expectations properly set and, as a result, will have a heightened potential for success within the franchise system creating a win/win for all involved.’