So I’ve submitted requests for information from some franchise companies, now what?
TALK TO EACH COMPANY
They’ve probably already started contacting you – likely by voice, text, and email – so take the call or reply to them to signal that you’re serious about learning more. These early info-exchanges are your key to getting to know each company, and them getting to know you as both parties determine fit.
This is more like applying for a job than buying a car. Think about being a good candidate!
Ok, but how do I talk to these companies?
Ask The Right Questions!
Here are 5 important questions to ask franchise companies that can help you stand out:
- Are you expanding in my local market?
- How fast are you growing?
- Do your successful franchisees look like me?
- How much money do your franchise locations make?
- How many of your franchisees started with one unit and then bought more?
Great, so what’s the process after these introductory calls (or text or email exchanges)?
FOLLOW OUR Franchise Buyer RoadmapTM
Our Franchise Buyer RoadmapTM is your guide on the path to opening your own franchise business, one step at a time:
- Complete the introductory info-exchange to determine mutual interest in continuing a dialogue
- Review the company’s websites (often they’ll have a consumer site and a separate franchising site) in detail, noting questions for future discussion (including who/how they facilitate any financing you may need, but there’s a whole other section on financing waiting for you here as well!)
- Check out their digital footprint across social media platforms to gauge their activity level, messaging tone, and styling polish (first impressions and all that)
- [Pro Tip] Keep your scheduled appointments for ongoing discussion with the company!
- If they haven’t offered it yet, request that they send you their Franchise Disclosure Document (“FDD”), and ask them how they typically handle timing for you providing acknowledgement of receipt
- Ask them about how best to contact existing franchisees in similar markets to yours, and plan to do a lot of these calls – they’re super important.
- [Pro Tip] Key question… “If you had to make the decision to buy this franchise again, would you do it (why or why not)?
- Back to the FDD… read it cover to cover, scrutinizing Item 6 for a schedule of all fees associated with operating the franchise business (like royalty and advertising fund), Item 7 for initial fee and startup cost ranges, Item 12 for exclusive territory definition, Item 19 for financial performance representations, Item 20 for lists of franchisee additions and terminations, and Item 21 for the franchisor’s financial statements
- Travel to visit one or more franchisees you’ve talked with, to get a feel for how the brand plays in the wild and what a day in your life as a franchisee will look like
- If the business requires retail or other commercial space, engage the company’s real estate site selection team to help you begin your search for a great location in your market
- Schedule your participation with the company’s next Discovery Day, where a group of qualified candidates like you spend at least a day with senior management.
- [Pro Tip] many franchisors pivoted to virtual discovery days during the pandemic, with a lot of them finding this to be a practical and successful format.
- Finalize any outstanding questions around your territory, real estate related startup costs (build out and fit up), and timeline to your grand opening (including travel to attend training)
- Commit to making the decision to proceed, or not, but don’t procrastinate.
- [Pro Tip] No one’s ever 100% sure, satisfying every last worry when making a decision like this (the old “nothing ventured, nothing gained”) but one of the nice things about buying a franchise is that there are so many people that have come before you, faced the decision, and made it!
Ok, so what FINANCING options are available to help someone like me buy a franchise business?
Good News!
There are many different financing programs people like you use to fund their franchise purchase and startup, from traditional bank loans to using your retirement funds (tax & penalty free). Here are some great resources to get you up to speed, including a free tool to show you how much you may be able to borrow:
- So what kind of franchise can I afford? Find out how Fundable you are with our friends at Funded Financial who can also help you find the best lender to get you the funding you need at the most attractive terms.
- I can use the retirement funds I already have – tax deferred and penalty free – to fund my business purchase, really? YES! Check out our friends at FranFund and their FranPlan that has allowed thousands of buyers before you to get into business debt-free.
- What about SBA-guaranteed loans? The SBA offers several programs allowing small businesses to access guaranteed loans. Check out their Lender Match service to get connected with potential lenders now.
Here’s to making your franchise business research and buying experience great!
Please let us know if there’s anything we can do to help
now or any time along the way!
