Going from the selection to the purchase of a new franchise involves far more than the flip of a switch. Just as in any worthy endeavor, putting in the hours for sufficient preparation helps ensure a successful decision.
Related:23 Steps To Success When Buying A Franchise
For one thing, the franchise selection process is hardly a one-way street. The franchise company will be checking you out as carefully as you should be verifying its claims and promises.
Many franchisors will invite candidates to visit their headquarters as part of the due diligence process. This visit is usually called Discovery Day. Discovery Day is the culmination of months of research as the company gets to know you while you learn the ins and outs of the business.
Ideally, you will have first consulted a franchise coach, who can help you narrow down your list of franchises to those whose businesses best suit your skills and experience. Most importantly, you can tap the franchise coach’s experience to help you locate those companies with whom you’re likely be most compatible.
Once you narrow down the field, you may start the mutual vetting process with a few companies. Franchise companies will see if you bring a serious professional intention and knowledge of the business. They will want to know if you possess the skills necessary to succeed in their franchise.
And you’ll want to check out their operations, their executives, their support services and whether you feel you could work closely with their team. Both parties will strive to impress each other.
The Franchisor’s Courtship
Here’s a window into what you as a potential new franchisee should expect.
Franchisors will see if you qualify to become a franchisee in their program. This will include a minimum net worth and liquidity.
Forms To Complete
These may include a personality profile or a questionnaire.
A Series Of Seminars By Phone
Franchisors will typically set up a series of phone calls or webinars, in which you’ll speak to experts inside the company to educate you about their business. You should figure on about one to two hours a week for the calls and lots more time for homework, which may include reading materials, such as the franchise disclosure document and an assignment to speak to franchisees. The franchisor sets the pace. The process can take from one to three months, and you’ll have ample opportunity to get to know their team.
By this time, you understand the nature of the business and exactly what owners do everyday. The franchisors should be well on their way to deciding if you have what it takes to be successful as a franchisee.
The franchisor will invite you to a Discovery Day, where you may join a small group of other prospective franchisees for a day full of meetings, including time alone with key executives, where you get a chance to get to know each other up close and personal.
If you’re still in the running to be invited to a Discovery Day, odds are you’re as interested in the franchise company as they are in you. And you’re ready to make a deal. You may already have consulted an attorney.
While a franchise company still has the prerogative to reject you, once you’ve made it to Discovery Day, the odds are in your favor. If you decide to proceed, you still want to consult an accountant to go over the financials with a fine tooth comb to check for any inconsistencies or problems not readily apparent to the untrained eye.
Only by participating in this thorough process can you be sure you’re ready to take on such an important commitment. Then, it’s full speed ahead!
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Contact Dan Citrenbaum to help you create the career you’ve always wanted. As a franchise coach, Dan brings years of experience helping people select and buy a franchise or existing business. You can reach Dan at email@example.com or at (215) 367-5349.
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