Validation Conversations with Franchisees

There is a lot of important information contained in a Franchise Disclosure Document. While it is all important, one of the most useful segments is the list of existing franchisees. When examining a franchise to determine if it is the right one for you, there is no greater resource than the insight of its franchisees.

Validation questions should be aimed at helping you determine overall franchisee satisfaction and the financial performance of a franchise. It will help you see if the franchisor is delivering on its value proposition in terms of supporting franchisees and offering a truly viable and successful business opportunity.

Here are some points to help you prepare for your validation conversations with franchisees.

1) Remember that everyone’s time is valuable. While franchisees are usually happy to help and offer advice because they too have been in the same situation, they are busy business owners. Respect their time. Perhaps call outside of peak business hours or set up an appointment to chat or maybe even offer to take them out for lunch or coffee if you are nearby.

2) Be prepared. Identify your personal and financial goals ahead of time and then have questions ready that will help you decide if this business opportunity is aligned with those goals. Prioritize your questions, so you'll ask the questions most important to you first in case you run out of time.

3) Speak with multiple franchisees. Make sure you pick a variety of franchisees to contact. Speak with those in all phases of their business development, from those who have only recently joined the system to those who have been in for many years. In a quality franchise system, you should identify a common theme after speaking with 3-5 existing franchisees or more.

4) Seek out those who may be struggling. In addition to talking with the brand’s top performers, also seek out those who may not be as successful as other. Ask them about the areas they struggle in and determine if this is something unique to the franchisee’s situation and if this is something you feel you personally would be able to overcome. Often, the reason a franchisee struggles is because they are not adhering to the system, so it’s important to determine if that is the case.

Not sure what questions to ask? Below are some you can put on your list, but remember to prioritize the ones most important to you.

  • What was their background before coming to the brand? What skills, experience and personality did they bring with them and did it align well with the business model? What attracted them to Sport Clips Haircuts?
  • Do they have a full-time job? Are they able to maintain their other commitments?
  • What is an average day like as a franchisee? How many hours a week do they work on or in the business? Is this more or less than expected? How much was it during the start-up period? Have they found a work-life balance or do they see it possible in the future?
  • What has been the most rewarding part of becoming a franchisee? What was their most unexpected struggle? Did this line up with their expectations? Do their answers line up with your expectations?
  • What has the training and support been like? How was it leading up to the opening of their store and has the support been ongoing? Did they have help with site selection? Is there marketing help? What kind of assistance did they receive nationally as well as on a local level? Do they feel they get their money’s worth from the marketing fund? How is the overall support?
  • Is the franchisor accessible? Do they feel the franchisor is committed to their success? Do they feel issues are dealt with fairly?
  • Don’t be afraid to get into the financials. Ask them whether they are happy with their financial returns to date. Do they feel they will be able to reach their financial goals with this business model? Ask them how long it took them to break even and how they calculated their break-even? Ask them if they feel the franchisor’s operating capital projections are aligned with what they actually needed.
  • Ask them if they have any advice to give. What do they think are keys to being successful with this business opportunity?
  • If they had to do it over again, would they? Has their experience matched their expectations?

Remember to filter responses and read between the lines. Because of the way our brains are wired, negative responses will always stick out in our minds more so than positive ones will. Ask yourself whether this person has similar strengths and weaknesses and if you can picture yourself forming a relationship with the folks you contact. Ultimately the individuals you validate with can become some of the best assets a franchise system has to offer, beyond the systems and resources the franchisor provides directly.