Evaluate a Franchise by Talking to Current Franchisees
When buying a franchise, one of the greatest tools you have at your disposal is the ability to contact current franchisees. Not contacting them and investigating their opinion of the franchisor thoroughly would be a big mistake. When you contact a current franchisee, you get the opinion and outlook of someone who is in the same position that you will be in, should you decide to accept the franchise agreement. For this reason, their advice and input is more valuable than any other you might get. If you have concerns about what the franchisor is like, whether or not their claims are true, how many hours you might work, or how the business is run, a current franchisee may be able to help you make a more informed decision about buying a franchise.
Often, the franchisor will introduce you to a few franchisees, and even take you on a tour to see their locations and to talk with them. These meetings can be helpful, but you have to do extra work to really get the most out of learning from current franchisees. It is a good idea to go back to those franchisees after the tour to ask them any questions you did not feel comfortable asking in front of the franchisor, or to get any answers they might not have wanted to disclose in front of the franchisor. However, keep in mind that even if you are alone with these franchisees, they may not give you a full picture of the franchise as a whole. Some franchisees are paid to solicit new ones, and if the franchisees you speak to were given money, they may not be entirely truthful.
Given this, you must search deeper into the network of current franchisees to get a true impression of the franchise as a whole. In the FDD (Franchise Disclosure Document), franchisors provides contact information for past, current, and future franchisees that you can interview on your own, who are less likely to have a biased opinion of the franchise. The more franchisees you interview, the better, to get the most complete picture. You can ask them things like whether or not they think the franchisor is honest, and what they think of the current FDD. You should also try to interview franchisees from a wide variety of locations, years of experience, and success levels so that you are not getting a biased sample of people either praising the franchisor or complaining about it.
When you interview current franchisees, keep in mind that some of the franchisees are going to be more successful than others. This can impact what they say to you about their opinion of the franchise as a whole. When you interview the less successful ones, try to ascertain whether or not the franchisor is to blame for their lack of success, for instance, if they are not flexible enough or are not offering enough support. Understanding why those franchisees are not successful can help you determine whether or not this franchise is the right one for you, and how to be successful if you do decide to buy it.
Filed under: Buying a franchise, Franchise Advice, Franchise Articles
I could not agree more. If I had been warned, I would not have purchased my franchise. Take a look at http://www.cdicorp.info and see the ethics and actual business practices of Management Recruiters International (MRINetwork) franchis and their owners CDI Corporation. It is a sobering reality check that you should be aware of.
Excellent piece of advice! If I may add, I would like to point out that having a good resource material like the best franchise guide would be a great instrument to have. This will give the would-be franchisee time-saving as well as money-saving techniques in this endeavor.
When the franchiser methodology is to train and actively encourages franchisees to work together it should be a good thing. But when the franchiser encourages you to do this with people who no longer hold a valid franchise agreement, who owe them huge debts, who they falsely represent as a regular francisee, you would naturally consider this to be unethical, woudn’t you? Read the facts and see if you think this is approrpriate behaviour of a global franchiser at http://www.cdicorp.info/management-recruiters-international.html
The advice is very on-point. However, please note that some of the more important franchisees with whom you’d want to speak (those franchisees who were terminated or could not be profitable) will be under confidentialty clauses that will prohibit them from speaking to you. When a dispute arises and a settlement is reached with the franchisor, the franchisor almost always demands that the franchisee sign a “gag-order” preventing them from sharing some of the problems in the system. I would also point out that although some franchise agreements cannot be negotiated, there are some that can. Either way, you should budget into your business plan the cost of an experienced franchise attorney to help you navigate around the franchise landscape. Jeff Goldstein; Goldstein Law Group; http://www.goldlawgroup.com [email protected]