As you proceed through a thorough franchise investigation, the most important part – BY FAR – is the franchisee validation. In this process, you will be able to converse with current (and former) franchise owners about their experiences with the franchise that you are investigating.
Here are some suggestions about topics that you may want to address is your validation conversations.
Overall satisfaction with the relationship
How do the franchisees feel about the franchisor? Is the relationship strong? Is it truly a partnership?
Initial and ongoing training and support
Does the franchisee feel that the initial training helped them to launch the business quickly and successfully? Was there training available for other managers and key employees in addition to the owner? Is there ongoing training to improve performance, learn about new initiatives in the business and remain current with the market?
Marketing Support and Effectiveness
What portions of the marketing program are handled by the franchise headquarters and which are addressed locally by the franchisee? Is the marketing effort being constantly improved and refined to reflect customer buying patterns and competitive pressures? What amount of money is being spent monthly to support marketing?
Initial Investment Estimate
Were the investment levels estimated in Item 7 of the Franchise Disclosure Document accurate? Did you need additional working capital until the business was profitable?
Income and Break-Even Timing
What margins are you seeing in the business? How long after the startup was the business producing an income? What are the key barometers of financial success in the business?
The Future
Do you have plans to expand in the future? Have you opened additional locations already? Why or why not?
Are you in the middle of a franchise investigation and seeking some guidance? Do you need help with validation work? Chris is here to help you! You can contact Chris Cynkar by telephone at 412-877-2000, by email at ccynkar@franchoice.com or visit www.chriscynkar.com.
