As part of your due diligence when researching franchises, you should ask current franchisees in the system about their experiences. In provinces that have franchise legislation that requires franchises to provide a franchise disclosure document, you should receive a list of all current and former franchisees within the system. In those provinces that don’t have legislation pertaining to franchises, you can ask the franchisor to provide you with such a list.
When possible, meet a few franchisees in person and call some others that are out of convenient travelling range. You want to get a broad perspective of the franchise.
What to Ask
When approaching a franchisee, there are certain questions you’ll want to make sure you ask to get an overall sense of how well the franchise is run. Here are some questions you should ask a current franchisee in a system you’re considering joining.
How are you finding your franchising experience so far?
By starting out with a broad question like this, you are allowing the franchisee to choose what to focus on, which will tell you a lot about their experience and how that experience is going. If they’ve had a completely positive experience, they’ll answer enthusiastically and start off with the positives. If it’s been good, but not overwhelmingly so, they’ll be neutral in their answer and if they’ve had a negative experience, they’ll likely start off by pointing out something negative or they’ll start off with a warning about the franchise.
How has your own personal background and work experience helped you with franchising?
This will prompt them to tell you their own working background and give you a sense of what kind of skills will be helpful when running this particular franchise business.
How close was the franchisor with their estimate of how much money would be required to get this business off the ground?
While an estimate might be off here and there, if you’re consistently hearing that the franchisor was way off with their estimates, that could be an indication that they’re outright lying to potential franchisees about the amount of money they’ll need to invest to start the business.
How long did it take for you to see a return on your investment?
This will give you an indication of how long you will have to run the business before you start seeing an ROI. Plus, you can compare the answers you receive to what the franchisor has told you to see if they are being honest about how long it takes to start making real money.
How well were you able to run your business based on the training you received from the franchise?
It’s not just enough to receive training, you have to get the right training. If a franchisee isn’t able to run their operation based on the training they received, that might be an indication the training is inadequate. Although you should keep in mind that every person is different and that particular franchisee may just not pick things up as quickly as others. If you hear from multiple franchisees that they had to receive subsequent training before they really knew their operation, that could be a red flag.
Has the franchisor listened to your concerns and what has it done to address them?
This will allow you to ascertain how well the franchisor listens to its franchisees and if it takes any action on concerns raised with it. This will also give you an indication of who to talk with if you have any concerns.
How much competition have you faced in your local market?
Obviously every territory is going to be different, but if there has been an uptick in competition across the board, that could be an indication that the particular industry that franchise is in is already saturated.
What unexpected costs inhibited growth for you?
Not all costs are apparent. Some won’t come to light until you start your business or until you’ve been running it for a while. Find out what week-to-week and month-to-month costs have popped up for the franchisees that have held them back, especially costs that are associated with the franchisor or that the franchisor should have made them aware of.
How satisfied are you with your territory?
It’s not just the size of the territory that counts here. Ask them if the franchisor helped them to discern if the territory was a good fit for this business and how right or wrong the franchisor was about that. Most franchisors conduct some kind of market research, so you’re essentially asking how good that research is.
What is the split between devoting time to the daily operations of the business and growing the business?
This will depend on what stage they’re at, but, you’ll want to know how much time you’ll have to spend running the business versus trying to bring in business.
If you had to do it all over again, would you still buy a franchise with this franchisor?
Naturally, you’ll want to do a bit more digging when you get the answer to this, especially if it’s a “no.”
How close are you to your earnings expectations for this business?
This question will only apply to long-established franchisees.
Use this list of questions as a guide for what to ask when talking to franchisees in a system. You will likely come up with your own as the conversation is happening. Overall, you should be able to get a good sense of whether a franchise is worth joining or not. FranNet can help you find the perfect franchise to connect with. Sign up for a free FranNet franchise search and consultation today.