Researching Franchise Opportunities? Call Franchise Owners Directly
If you're looking to open a franchise business, you have a lot of research to do before you start contacting franchisors. You will be narrowing down industries, evaluating brands, services, and products, and pouring over franchise disclosure documents. There are many ways to get information about the financials and business operations, but the most illuminating source is existing franchisees.
Straight From the Horse's Mouth
You want to open a Subway franchise? Who better to talk to than the owner of the Subway down the street? Everything you need to know about owning and operating any given franchise is a phone call away. More importantly, everything you didn't know you needed to know is a phone call away.
All the marketing collateral and FDDs won't necessarily tell you what it's like dealing with the franchisor on a daily basis, but a current owner will. They can also offer insight into the overall quality of the brand, business model, and operation.
Where to Get Franchisee Contact Information
Every FDD includes a list of existing franchise unit owners and their contact information. You will find it in every FDD under "Item 20: Outlets and Franchisee Information". The law requires franchisors to include contact information for current and former franchisees (those who parted ways in the previous fiscal year). The latter group may skew negative, but you want the perspective of both groups.
How to Approach Them
Most franchisees will be willing to speak with you, provided you approach them appropriately. Keep in mind they are under no obligation to help you, and you're asking a stranger to do you a favor. So, the first call (or more likely, message) should be made with the intention of providing some context and developing a rapport. Something like, "I'm considering opening a Marty McFly Orange Vest franchise, and was hoping I could talk to you about your experience operating the business."
What To Ask Current and Former Franchisees
Once you've established a rapport, there are a few core themes you will want to get information on:
1. Brand and Customer Acquisition
Does the brand and marketing work? Does the franchise drive customers? One of the main reasons for going the franchise route - and paying the fees - is the established marketing function. A good franchise should drive customers.
2. Operational Support
Does the franchisor respond to support requests in a timely manner? Does the franchise HQ help when you need it? Do you routinely speak with other franchisees? Are they happy with the operation?
3. Financials
How long did it take you to break even? Is there something you would have done differently to break even more quickly? What can I expect to earn? What are the main drivers of financial performance between units?
4. Work-Life
What is the workload like? Are you able to rely primarily on employees? Do you have to work 20 hours a week, or 60?
5. Open-Ended
Knowing what you know now, would you have opened this franchise or a different one? Would you recommend this franchise? Why did you sell/leave (for former owners)? Do you have any suggestions for new franchisees?
How Many Franchisees Should You Talk To?
As many as are necessary to understand the opportunity, sticking points, and likely financial performance. Ideally, you want to hear from high performing units, low performing units, and everything in between. That may mean talking to 10+ owners, and each call is worth the time.
Want to learn more about evaluating franchises? Take a look at the latest article from franchising expert Brandon Clifford, How to Research Franchise Opportunities. He offers a roadmap for evaluating different franchise opportunities to find the right one for you.