So You Want to Own a Franchise. What should I know?Mark Borkowski
Many people do not have the wherewithal or ability to acquire or start a business. They are turning to buying franchisees. Maybe not a bad move.
I asked the expert of Franchise, Joel Libava. He is referred to the Franchise King in the US.
He told me that if you are looking to become a franchise owner, there are several ways for you to increase your chances of success. One way is to arrange some time to talk with the operations people at franchise headquarters, and if possible, the president of the company. Some well thought out questions can have a huge impact on your decision to become a franchisee.
Here are five questions that most people never thought to ask:
• Can I have some specific examples of problems that your franchisees have experienced, and how your employees jumped in to help out?
(You are trying to find out how good their support team is. There should be some great “stories” of how they were able to alleviate a franchisee’s problems)
• What types of people have you found to be super-successful as franchise owners in your system, and what types of people have been below average?
(You are trying to find out if there are any patterns that you can detect with either the really successful franchisees, or the ones that have not done so well.)
What are some of reasons you have turned down prospective franchisees?
(Here, you are trying to find out how serious they are about finding the best franchise owners.)
• Do you have any ongoing litigation with any franchisees? Can you tell me about it? If not, if you’ve had any litigation in the past, can you share what it was about, and how it ended up?
(Lots of franchise and non franchise companies experience the many pleasures of lawsuits. Listen carefully to their answers. Who sued who? What really happened?)
Are there any major technology/equipment upgrades planned for the current system?
(Upgrades could be equipment upgrades that the individual franchisee has to pay for, or major technology upgrades that the franchise company pays for.)
Questions like those are not commonplace. That’s the point. The more you can learn before you invest, the better you’ll feel when you write a $35,000++ check for the up-front franchise fee to the franchisor.
The entire business world is becoming more transparent. Allow me to rephrase that; The entire business world is learning that transparency is really the way to do business. Not many industries will be able to escape this fact in the near future.
Employees of the franchise companies that you are researching may or may not be able to answer some, or even all of these questions. If they can’t, they should at least be willing to go the extra mile to get those questions answered, though.
Consumers can’t be “slammed” into making purchases anymore. They want to feel that they are in control of the buying process like never before. Companies that understand this will be successful ones. Companies that allow the buying process to happen naturally, will win. Companies that refuse to adapt to our rapidly changing buying environments, will fade away.
By: Mark Borkowski is president of Mercantile Mergers & Acquisitions Corporation. Mark specializes in the sale of mid market companies in Canada. He can be contacted at www.mercantilemergersacquisitions.com
Joel Libava, The Franchise King,® is the president of Franchise Selection Specialists Inc, a franchise consulting firm that specializes in helping prospective franchise owners all over the US find great opportunities in franchise ownership. Joel discusses all aspects of franchising on The Franchise King Blog
Posted: October 13th, 2012 under General.