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5 Rockstar Questions You Need to Ask When Becoming a Franchisee - Episode 7

Erin Carpenter
Apr 17, 2018 6:35:01 AM

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Angela Coté is a Franchise Growth Catalyst who has lived and breathed all sides of the franchise equation - as a franchisor, franchisee, field operations manager, and now as a consultant helping franchisors achieve exponential growth and profitability.

Having met countless franchisees when helping run her family-owned M&M Food Market, the iconic Canadian franchise with almost 500 locations, and as a multi-unit franchise owner herself, Angela has unique insight into the motivations behind franchise ownership and investment.

There are some universal questions all prospective franchisees have, like how much money will I make, or how long will it take me to earn back my initial investment? But, you need to dig a bit deeper to ensure you’re making your best possible investment and career decision.

In this article, Angela shares her signature “5 Rockstar Questions” you should ask as a prospective franchisee before making your final buying decision.

Question 1: Do You Have a Passion for the Brand?

IMG_3635 - Angela CoteA lot of people first start thinking about becoming a franchisee when they notice a gap in their community. Maybe you were on vacation and noticed an ice cream shop with a line around the block and think the concept could do well in your hometown. Or maybe you’ve read about the rapid expansion of boutique fitness studios and noticed there aren’t many options in your neighborhood.

These concepts are doing well everywhere else, so won’t they thrive in your region, too? It seems like an easy way to make money.

Before stepping too far into the sales process or signing on the dotted line,, ask yourself if you really have passion for the brand. Most franchise agreements are at least 5 years long, and many brick and mortar agreements are closer to 10. If you don’t love the concept, the novelty could wear out, and it’s much harder to be profitable when your heart’s not in it.

When deciding your level of passion, make sure to look at the brand overall - not just the product or service.

An example that came up in this episode is of a termite inspection franchise. Is anyone REALLY passionate about working with termites? For brands in an un-sexy industry like this, go beyond the outer layer and change the narrative. Maybe you’re passionate about making people’s homes safer. Or maybe you’re totally inspired by the founder’s story. Perhaps it’s taking an innovative approach to an age-old problem.

Your enthusiasm is key to franchise success. It’s a common misconception that a brand will sell itself, even if it’s a household name. As the owner, you have to be excited yourself to drive business.

Make sure the concept excites you and the passion is there, otherwise you could end up investing your life savings and then feeling stuck a few years down the road.

Question 2: What are the Company’s Purpose and Core Values?

Why does the franchise concept exist in the first place? Companies that have clearly stated purposes and that truly live and breathe their core values tend to outperform their competitors. This is true for both franchise and non-franchise brands.

A solid business has a clear purpose explaining why it exists. Take Nurse Next Door based in Vancouver, for example. Their purpose is “Making Lives Better.” Same goes for Tutor Doctor, whose mission is to change the trajectory of students’ lives. Everyone in these organizations knows, lives, and breathes their missions.

Once you know their mission and values, apply them to yourself. Do they make you excited? Do they motivate you? Do you truly align with them? If the answer is yes, the franchise could be the right fit for you.

When a brand is truly living out its mission, it will recruit like-minded franchisees and customers, increasing growth and profitability.

Question 3: What Systems and Support Does the Franchisor Have Set up for Franchisees?

IMG_2633 - Angela CoteFind out exactly how franchisors support their franchisees. One key metric to look for is how often a franchisee will meet with his or her franchise business coach (sometimes known as a field consultant or area manager) in person.

There’s no one right answer to this question - it really depends on how much support you’ll think you need, and ensuring someone is there for you when you need help.

There are some general parameters to keep in mind to help you determine whether you think they’ll be offering you enough support. First, will the franchise have a brick and mortar location? If so, it’s generally more important to have in-person visits because your coach will need to see your physical space.

Is it a newer brand or a more established one? Newer brands are typically closer to the company’s home base, so there should be ample opportunity for visits. If it’s a more established, spread out concept, expect fewer visits.

Would you be new to the world of franchise ownership, or are you an experienced multi-unit franchisee? If you’re new, you’ll probably want to see someone every couple of months. If you have more experience, you probably won’t need as much. Make sure you’re assured that you’ll see someone from corporate headquarters as often as you’ll need them.

Another important support is a system in place for franchisees to share their input and ideas. Franchisees need to be heard, so it’s important there’s a method in place for you to give feedback. The information flow needs to go both ways, so also ask how everybody is kept in the loop and on the same page.

Often this is an online portal, but it could be anything else from an open communication line with your business coach to a quarterly meeting. More established franchises often have a franchise advisory council with a representative for each region, so you could speak with the rep for your area.

Another question you could ask are what strategies the company employs to ensure profitability, and the specific tools and resources provided to support your growth.

Question 4: How Many Transfers and/or Closures has the Brand Experienced and Why?

Transfers and closures don’t necessarily mean there’s a problem, but you need to make sure you know the why behind them.

Were the franchisees not the right fit? Were the franchisees lacking support? Was the closed location in a bad market?

If these are the reasons, it could mean that the brand is still trying to figure out key aspects of successful franchise growth, like finding best-fit franchisees, developing effective support systems, and knowing their ideal markets.

It’s essential the brand you’re considering has these things figured out to lessen your personal risk.

Question 5: What Technology Does the Company have in Place to Create Efficiencies for Franchisees (and Ultimately Profitability)?

IMG_3281 - Angela CoteFranchising is a growing space, so it’s essential brands stay on top of the newest and most effective technologies to ensure they’re not getting left behind and leaving their franchisees at a disadvantage.

There are so many great options franchisors can implement into their systems to make life easier for franchisees. One of the most important ones, as mentioned earlier, is a communications hub to allow franchisees to communicate with both corporate headquarters and their fellow franchisees. The built-in network of your fellow franchisees is one of the greatest advantages of franchise ownership, so you want to be able to leverage their knowledge and insights quickly and easily.

Aside from communications capabilities, the operations manuals should also be accessible within the hub.

Another technology to look for is a program with the capability of showing franchisees their metrics in real time. It should show the KPIs they should be reaching each day, and should allow franchisees to monitor their performance throughout the day. A benchmarking tool is also beneficial, allowing you to compare your metrics with those of your fellow franchisees.

Lastly, find out what technology the brand uses to communicate with its end users. Are they managing emails on an Excel spreadsheet, or using a more sophisticated tool that can track data to help personalize their customers’ experiences?

You want the brand to be innovative. It’s so easy for a new brand to come along and take business away from an older one that’s not utilizing technology to its greatest ability. Analyzing the brand’s technology is a good way to see if the company is staying on top.

Of course, there are many other questions to ask throughout your journey to franchise ownership or investment, but these five questions will give you unique insight into the brand’s inner workings to help you decide if it’s the right fit for you.

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