We are continuing on with questions to ask franchisees as part of your due diligence. We've covered many categories of questions you should be asking when you're talking to the franchisees of that franchise to do your due diligence … today our category is leadership validation.
We’ve got three questions today. This first question is such an important question to ask. What do you feel about the leadership of the franchise?
So if you're asking me as a prospect franchisee, I would say my franchise has been through its own roller coaster ride through the years. The leadership team grew very quickly because the franchise was growing very quickly. That has its own pros and cons. Because people were coming, people were going, and nobody really understood the model because so many changes were happening. So there are pros and cons to an emerging brand franchise, which is what we ended up buying into. On the other side of this, why is this an important question? A lot of times when you're calling franchisees (during due diligence phase), you're likely going to be thinking about only asking questions about them and their business. And you're just going to want to dive into the numbers. How much money did you make and did you make a profit? That's usually what people want to ask.
That's why you want to work with someone like us to get clarity on the questions you should be asking. And most people never really think about asking questions about the leadership of the franchise itself. Look, guys, if you're going to be signing a 10-year agreement with a franchise, don't you want to know who's steering the bus? Don't you want to know what direction they're taking that organization? Don't you want to know how they might have overcome challenges in the past? I think if we had gotten a better understanding of this in our franchise we may NOT have made a different decision, but it's so much better knowing that going in with eyes open.
We got three questions today, so I'm going to go keep going, but I want to make a comment in looking at the franchise that we acquired. I didn't even know to ask this question, and I wish I had, because I think it would've given us some information that we found out later. NOT that the leadership was bad by any means in this organization, but they were really not focused. They were really trying to do too much and too many different things at the same time. It came back many times to the support that we got and I think it (this question) would've opened up some additional information. All this would've done … I don't think it would've changed our decision necessarily ... but it would've helped. The expectation questions we talked about in a previous episode, we would've gone in (with a different mindset) kind of knowing, hey, I'm going to have to do some work here. Without the right leadership team or the leadership team being kind of all over the place, we're going to need to spend more time really making this business work, rather than if they had truly focused and had a really refined system that wasn't so disorganized. I guess that's the best way I can and can state what kind of happened to us.
Question number two. Is your franchise staff competent? That's a pretty tough question ... right?
In our franchise, yes, they were competent. What would be helpful for a prospective franchisee to be looking for is as they're talking to these franchisees and looking at the leadership is understanding how many people are in each department. If you're looking at the leadership and there's a lot of people in franchise development or sales, because they're trying to bring a lot of people in, but you don't see a lot of people in support and operations, that should be a red flag.
So maybe this will be the next question that you would want to ask a current franchisee is related to support and operations. Like, do you ever have conversations with the leadership team and who is on the team? Can you just pick up the phone and talk to somebody? Because in our franchise we didn't even really have a dedicated operations person. We had a dedicated salesperson who's saying come on, come on, take a bigger territory, don't buy a 3-unit, buy a 10-unit. They are salespeople and then once you cut the check, that's it. So make sure you know what comes after the purchase.
Those are very, very strong points. Our final question for today is: does the franchise corporate office act with your best interests in mind? Can you provide some examples?
I think this question is going to depend on what phase that current franchisee is in and so in the beginning of our franchise I know that I would've had raving things to say. That they had our best interests at heart, because the reality is a franchise wants you to be successful. You're going to go through this honeymoon phase. You're going to go to training and maybe the operations team will come out and help you do your grand opening. The reality is the franchise wants you to be successful. They're going to put all their effort into ramping you up, especially that first year. So you're going to have a lot of hand holding. You're going to feel comfortable. You'll probably have a lot of great things to say about the franchise. So it's more like after the fact, once the honeymoon period is over, then how are you going to feel about the franchise?
We were seeing a lot of people leave the leadership team, and because we saw them going down a completely new business model that they had relatively no experience in and we felt like we weren't getting any love and attention and focus. Therefore we kind of felt like we were doing it all on our own. So, as you're talking to different franchise concepts, again, understand where that franchisee is tier-wise. Are they a top performer, mid performer, or bottom performer? How long have they been in the system and reading between the lines in their answers as to why and how they're feeling the way they are about that franchise leadership team.
This is really critical for you and goes back to a previous set of questions that we had in another episode. So go back and review the previous ones. You can request a copy of these questions here if you would like. What's really going to have an impact on the answers to these questions are going to be what tier they are in the franchise system. Are they top performers? Are they mid-level performers? Are they low-level performers? You're going to find that you're going to get different answers depending on where they are in the system. You can't really ask a new franchisee these questions because they don't have enough experience to really tell you. These questions are really important, particularly if you ask them to all three levels of franchisees.
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. |
