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Interview Franchisees before buying a Franchise

Written by : Susan Ward

Interview Franchisees before buying a Franchise

Buying a franchise is an increasingly popular way to start a business. Before you buy a franchise, however, you need to perform due diligence to be sure that the franchise is a viable business and that you will be able to work well within that franchise's organization. Interviewing franchisees is an important step of the franchise investigation process because of the light it will shed on the franchise's operations and on the franchisor - franchisee relationship.
How the franchisee has been treated by the franchisor and how he feels about it will say a great deal about the kind of working relationship with the franchisor you can expect if you buy that franchise.

Finding Franchisees To Interview

The franchisor will provide you with a list of franchisees and their phone numbers if you ask. (If they won't, that's a huge red flag in itself.) If a franchisor supplies you with only a partial list of franchisees, be sure you don't only talk to franchisees that are on the list. Search out others. With some established franchises, finding their different locations can be as simple as visiting their web site and clicking on 'Locations'.

When you're selecting franchisees to interview, be sure you interview owners at a mix of franchise locations. You don't just want to talk to those at the busy outlets, but also those at the average or poorly performing outlets, too.

Try as well to interview a mix of newer and more experienced franchisees.

Questions To Ask Franchisees
  • Was the training and support provided by the franchisor adequate to prepare him or her for the first year of the franchise's operation?
  • When procedures change, does the franchisor offer further training?
  • What problems have occurred and how did the franchisor deal with them?
  • How much help promoting the franchise's product or service does the franchisor provide?
  • What are the franchise's sales patterns for a typical day, week, and month?
  • Is there a minimum sales quota set for the franchise and is it difficult to achieve?
  • Is the franchise's continuing fee or royalty reasonable (in his or her opinion)?
  • What was the total cost of the franchisee's initial purchase?
  • Does he or she feel that the return on investment has lived up to their expectations?
  • Does the franchisee have any input into the operational or management decisions of the company?
  • Why did he or she choose to buy this franchise?

Franchisee Interview Tips

Remember, your goal is to gather as much information as you can to help you make an informed decision about whether buying this franchise is right for you. A yes or no answer won't tell you much. Encourage the franchisee to expand on his answers by asking for examples, or even saying something such as, "Can you explain that?" if you don't feel you're getting enough information.
Unless you're an experienced note-taker, the best procedure is to use a recorder. If you do, be sure to ask the franchisee if you may record the interview first.
Franchises are like any other business; the franchise you're thinking of buying into may not be a good deal. By interviewing franchisees as well as talking to the franchisor, you can gain a much clearer picture of whether or not buying that franchise is right for you.

Susan Ward
Small Business: Canada Guide

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