Greetings franchisees, or franchisees-to-be,
If you read the last blog and you have decided that you are going to listen when you call people for due diligence, then you need to have some questions written down to ask the experienced franchisees.
First, the franchisor can't tell you how much profit you will make. That varies a lot depending on many variables. It will be up to you to buy materials, pay employees, control general expenses etc, so corp doesn't know how much profit you will make. That will be up to you. So, ask the people that have been in business a few years about their profit. Does that number include paying themselves? What all are they including in their expenses?
Second, call EVERYONE in your region. Call the ones that have been in business a year, 10 years, EVERYONE. It is good to call people all over the US, but concentrate on the people who will be closest to you.
Three, ask to spend a day with a franchisee in your area. All day. If it isn't part of the buying process, then do it anyway. If it is a store or resturant, just hang out there observing. If it is a business where you can't go inside, like a Maid Service, then keep asking owners until you find someone who will let you.
I will write more on this, but due diligence is very important. I have had franchisees that wish they hadn't purchased a franchise and when I ask them what kind of due diligence they did, they always say that they called a few people that were on a list of franchisees that the company gave them. Do you think that list is going to have people that are struggling, or disenchanted, or going out of business?
If you were going out to buy a house and a car and other large purchases, wouldn't you make sure that you have checked out everything, asked other people, and done everything you can do to make sure that all that hard earned money is going into a good investment?
Why wouldn't you do at least as much when buying a business?
Fran
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3 comments:
Wouldn't you expect a prospective franchisee to do more than spend a day?
I recommend that prospects work in the franchise for between 4-6 months -they may find that they don't actually want to sling coffee.
I completely agree. If at all possible, work in a franchise before buying. Unfortunately, there are too many "I will be the boss/owner/president" so I don't need to know what my "worker bees" are going to be doing. They assume they either will only be doing some labor at first for a short while, or just occasionally. After 2 or 3 years, they find that they are still doing the work that they were never interested doing in the first place. Thanks for the feedback.
I like this article, and I'll remember it since I plan on running my own business soon. I can definitely use all the advice I can get! Lately I've been thinking about buying a business (maybe a franchise? home-based? I don't know) instead of starting one from scratch. Any suggestions? Advice? Thanks so much.
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