WHAT SHOULD YOU DISCOVER ABOUT A FRANCHISE ON DISCOVERY DAY?
You’ve done your research on new business opportunities, you’ve whittled down your list to your top franchise choices, and now you’re ready to make the leap and attend your first Discovery Day.
So, what should you be looking to discover about your chosen franchise, the franchisor and the franchise opportunity?
First, be sure you understand what the opportunity is all about. You may know the business as a customer, but get to know the business as an investment. Is the concept sustainable? How long has it been around and are system average sales on the upswing or experiencing negative comparable sales? Does the business have longevity with the customer base? How does the business make its money? Are margins and operating costs shrinking or growing? All of these questions are important to answer on Discovery Day. As an investor and franchisee, you want to be sure you are putting your money to work for you in a viable, sustainable, long-term growth vehicle that will stand the test of time and have some defensible barriers to entry for competition.
Second, is the concept something you are passionate about? One of the major challenges for franchise candidates that are in job or career transition is answering the question: Are you buying yourself another job or are you investing in a career? In order to be truly successful in franchising, you want to invest in a concept that you care passionately about and embrace the opportunity to start a new career doing something you love.
Next, be sure to do your homework on the franchisor. You will want a franchisor that has been in business for an extended period of time, that is a financially strong and stable company, and has a track record of success. Look to see how many franchises open versus close on a year to year basis. Does the concept seem healthy? Are there an abnormal number of closings that cannot be easily explained? How are new franchisees performing? And perhaps most importantly, what is the retention rate of franchisees – in other words, how many franchisees renew their franchise agreements at the end of their term to sign up for an additional term? This will be the best representation of how the franchisees feel about the business, the model and the franchisor.
And finally, when at Discovery Day be sure to gauge the level of support the franchisor provides. Is it adequate for what you are investing? Does it seem to be too much support – are there too many rules and regulations on how to operate the business? You want a franchisor that has years of experience and a solid track record of success. You will want to see support staff that not only has years of experience in this particular field, but also that has a decent amount of tenure at the franchisor. The more tenured employees at a franchisor are typically the more experienced team members who will be training you on how best to execute the model. And be sure the support you will receive covers all areas of business needs, not just one or two particular areas. You will want support in training, marketing, operations, IT, and more.
Discovery Day is your chance to interview your potential franchisor to ensure they are the right fit for you. You are making a significant investment that will shape your career for years to come – be sure to do your homework and pick the best franchise for you!