Today we're going to do something a little different. We're not going to speak on a specific topic, rather we're going to talk about what are some of the most important questions that you should be asking during due diligence with the franchisees of any franchise that you're investigating.
I think this is so important and this is actually the "S" in our proprietary franchise roadmap system. And the "S" actually stands for "serious". It's where you're getting serious and you're doing your due diligence and talking to other franchisees. It's great that you can get that real-life experience and kind of understand the dynamics of the business versus starting it from scratch and having no clue (which is really hard and very risky).
We'll help you with this and we actually will provide you with a full list of these questions if you ask us for them. These questions are broken up into categories. The reason that they're broken up into categories is that it's easy for you to lump them together during your franchisee conversations. When you're asking franchisees it's really easy, and we can speak from experience here because we went through this with our franchise, to get lost and go all over the place in those interviews. So it's really critical that you have some type of structure to your questioning. So these questions are broken into categories, which we're going to go through these next few episodes, so I'm not going to do them all today. We're going to start off with history and competency. I can't even say that word ... I guess I'm incompetent. So I'm going to ask Stacey these questions and what I'd like her to do is to answer them with maybe something from our experience or from one of our clients' experiences and tell you why this question is so important to ask.
Let's start off with number one, you ready?
In history and competency, number one is what did you do before you purchased the franchise? So you're asking another franchisee this.
So Dave would be asking me as the owner of our Hawaiian Coffee and Smoothie business, right? And the reason you want to ask this question is to understand kind of what were they doing before. Why did they buy this franchise? And just kind of understand their history because as you may know when we do our webinars we always do our franchising quizzes, and one of the myths or facts we always ask is do you have to have industry experience to be successful in franchising. And what's the answer to that?
You got to go back and watch one of our other episodes. Sorry about that ... we're not talking about that on today's episode. So I think that's a great point, Stacey. It's good to know when you talk to the other franchisees to get a flavor of what their background is. If you're going into a franchise and everybody you talk to seems to be a specialist from a previous career in that area, and you are not, that's got some waiting, right? You have to put some waiting on the answer to that question. Other than that industry experience isn't necessarily needed based on the franchise that you're looking at. It's always helpful sometimes, but not needed.
So let's go to question number two. Why did you leave your previous position? This may not be necessarily true always because they may be an absentee owner or partially absentee owner and they're still in their current position. But if they did go into this franchise that you're interviewing them for this question would be very applicable. ... why did you leave your previous position?
In my case, it was a midlife crisis. We owned another business after doing it for 10 years. It was very successful and profitable, but we sold it for a nice profit and I just had a midlife crisis and needed something fun and different to do, and found a franchise that gave me that.
It's a good question. Did they leave a high-level position to go into this franchise? If they did and they're successful at it that's a good thing. I think if they did something that was a little bit less skilled before and they jumped into this franchise and they're successful, that's a good thing to know too also. That means that you don't necessarily have to have that specialty knowledge in that particular industry as we just talked about in question number one under history and competency
Now last question. How long have you been a franchisee of this franchise?
Well, in our case we do it as a husband-wife team. We've been running our franchise for 16 years now. When somebody asks you that question, you want to kind of understand their history. Because we also didn't lay out the precursor recommendations yet where we would highly encourage you to not just to talk to one franchisee or two franchisees, but kind of have all tiers of franchisees. We want you to talk to those who are the top franchisees to get an understanding of what makes them different and the best and the most successful in that franchise. Talk to the middle tier, and why are they in that middle tier. What's similar to the top tier? What differentiates them from not being in the top tier? Talk to a few people who are in the bottom tier who are the underperformers? I mean, why are they underperforming? Are they not following the system? Is it location? Are they not marketing or getting marketing help? Try to truly understand why they might be underperforming and use that to your advantage so that you can figure out how you can be that top performer in that franchise if you go forward with that one.
These are great and very important points. Adding to that, you want to talk to some relatively new franchisees on top of tiers of franchisees. When you go to talk to these franchisees a lot of times the franchisors are going to try to steer you towards franchisees that are more successful franchisees. It is to their benefit to do that. Don't let them do that to you. Make sure you talk to the top tier, middle tier, bottom tier, and the new franchisees. Don't skip this step.
What's Your Next? - Podcast
 | Author BioI’m Stacey Riska aka “Small Business Stacey”, your franchise placement specialist. I help aspiring business owners find the PERFECT franchise so they can get to the next level in life and business. |
