Meeting the Franchisor – What to Prepare
When you’re meeting a prospective franchisor for the first time, it’s a chance to have their undivided attention and you want to get the maximum out of the appointment. Here’s how to prepare…
A franchisee-franchisor relationship is an important one, so take the time to make a good impression by being professionally dressed. This means fitting to the business style rather than simply a business suit. Make a call as to whether or not it is appropriate to bring your spouse to that first meeting. You may be asked to sign a non-disclosure document. This is standard practice.
Read through the franchise prospectus prior to the meeting and do your own online research and comparisons regarding competing brands. You should ideally have had an initial discussion with the franchisor over the phone or at a franchise exhibition. You may have an interest in a particular location, though not necessarily. If so, make an evaluation of that locality for competition and market.
Attend the meeting with a list of probing questions. To frame these, you can go as simple as a SWOT (Strengths, Weaknesses, Opportunities and Threats/Challenges) analysis. Remember that the meeting is a two-way interview, and no franchisor will view you as a serious candidate unless you have such questions. Every franchise is different so there are no pro-forma questions, but the following are some questions you may want to start with:
- How much income can I earn?
- Can I achieve my lifestyle goals through your concept?
- Do our personal values and culture align?
- Does the franchisor help with financing?
- Are there any financial incentives or deals?
- Is there a dispute resolution mechanism?
- Do you help with finding the best site?
- Is it a turnkey package?
- Is there an exit strategy?
Get ‘into’ the moment
There’s a saying that has more than a grain of truth that ‘If you’re on time, you’re late’. Arrive early for the meeting and take a few minutes to soak up your surroundings and mentally attune yourself to the environment. What impression does the office and staff project? Does this feel like a business that has growth potential and marketing savvy? In today’s world everything (including yourself) is all about creating brand awareness. Does the business communicate clear brand values?
Not many of us can claim to be experts in evaluating people – divorce rates would be far lower if we were! Indeed, many compare a franchise relationship to a marriage. You may have to simply go on gut feel, but a person who truly understands his business can usually explain it succinctly and clearly. Be a bit cautious if the business model “takes years to fully understand”. Experience may take that long, but not understanding. A business relationship is all about trust, not long-winded salesmanship, so evaluate the franchisor to the best of your ability and decide if it’s someone you can build a lasting relationship with.
Look out for discrepancies. Your decision will not be based on this interview alone – but check whether everything you’re told matches your prior research. Take notes so that when you later speak to existing franchisees, what they say matches what the franchisor said.
The Franchise Package
The heart of the franchisor’s presentation will no doubt concern this. It is a lot to absorb, but what you must try achieve from this first meeting is a fundamental understanding of where you will make your money from, and where the franchisor will make its money from. You need to start prioritising what is important out of the mass of information you’re hearing. It is important to gain an understanding of how the franchisor makes money. If the franchisor’s only apparent source of income is the franchise fee, this may indicate the franchisor is more interested in recruiting new franchisees than supporting the existing network. As the presentation continues, tick off your questions as they’re answered – and if not make sure to ask them.
This initial meeting is by no means the end of the process, but it is an important step. Following the meeting you should take the following steps:
- Speak with your family
- Interview existing franchisees for a more balanced view
- Collate all the information to decide if this is potentially the business for you
- Be systematic and do not rush in to the first franchise that comes along