Validating with Franchise Owners
Important Questions To Ask
Overview of Validation
Validating with existing franchise owners is one of the, if not the, most important and exciting steps of your franchise research (aka “Validation”). During this phase, you’ll be speaking with and learning from franchise owners of the brand(s) you are researching. These are fun and insightful conversations, so enjoy them!
At this point in the process, you should be inspired and excited about the potential fit of the franchise. And now you’re going to get real-world insight and validation about everything you’ve learned about the franchise.
As you go through your conversations with franchise owners remember they’ve been in your shoes and understand how you feel right now in the process. The more insightful questions you ask the better information you will get. Also, while the franchise owners you’re going to speak to are typically very comfortable helping you learn more, be respectful of their time and energy. The more comfortable you make them feel, the better insight you will glean.
Getting in touch with the owners…
You’re going to be the one initiating the contact with the owners so have a good outreach plan. There’s a list of franchise owners at the back of the Franchise Disclosure Document. Check the Table of Contents in the FDD to figure out exactly where. And, sometimes, you may need to ask your Franchise Development Representative for a contact list. It’s also best to ask your Representative the best way to get in touch with owners (some prefer emails, some prefer texts, etc). Be prepared to follow up multiple times if need be. Persistence can pay off because these calls are important!
Here’s a sample message you can tailor for an email and/or text:
Hey, [Franchise Owner First Name], I’m working with [ Franchise Development Representative name] and thinking about opening a [Franchise Name]. Would it be possible to grab 20-30 minutes of your time over the next week to hop on a call to learn a little about you, your business, and your experience?
I’ve been impressed with the organization so far and am excited about the business and opportunity. [Insert a quick sentence or two about why you’re thinking about opening a business and your background…for instance: I’ve been in the corporate world most of my career and am thinking about breaking free. My background is in sales/leadership roles/ in the finance world.]
Would love to pick your brain a little.
Thanks
[Your name]
Once you’re on the call, ask some warm-up questions and thank them for their time…
- What were you doing before you opened your franchise?
- What inspired you to open your own business?
- Why did you invest in this particular franchise?
- Do you mind if I ask you some questions about your experience so far?
Next, you can use these 10 questions to dig deeper…
1. How does the franchisor assist with site selection (if brick-and-mortar-based business)?
One of the most critical issues for a franchise, particularly a brick-and-mortar-based franchise, is the selection of a great location. Ask questions to understand what types of support the franchisor offers for site selection.
2. How long did it take you from signing your franchise agreement until you opened for business?
Getting properly opened for business has a lot steps and can take longer than you think. Ask follow-up questions to understand what actions you could take to shrink this time and get into business faster.
3. What support does the franchisor offer regarding marketing and customer acquisition?
Once you’re open for business, it’s time to generate revenue which starts with acquiring customers. You want to uncover what support the franchisor offers in marketing to find potential customers.
4. How has your revenue ramped up?
With this one question, you will have the opportunity to dig into a variety of topics including marketing, pricing, customer retention, customer statistics, and others. Use this as a broad starting point to nail down some financial statistics.
5. How difficult has staffing been in your business?
Most business owners will tell you that the most challenging part of ownership is finding, retaining, and managing great people. Ask questions to understand the specific challenges related to talent management in this business.
6. Were the financial assumptions you built into your pro forma accurate?
You want to know answers about profitability and time to break even. However, this is a sensitive subject for many owners who do not feel comfortable discussing income and profitability directly. Use this question to beat around the bush and start a conversation about profit.
7. What has been better than expected with your business?
There will be some issues that may have worried the owner that did not prove to be a problem. This may help to alleviate some of your concerns.
8. What is the biggest challenge you faced in your first year in business?
This may be an issue that you did not foresee. It will also be different for different owners. So, it is important to ask this question to everyone to solicit different opinions.
9. What skills are most important for a successful owner to use in this business?
You come to this juncture with a skill set that is stronger in some ways than others. You want to evaluate if your skillset – team building, marketing, sales, financial management, customer service – is a good match for this business.
10. Are you looking to expand to additional locations?
This is an insightful question. If the owner is looking to expand, that is a big positive. If they are NOT looking to expand, there are various reasons why that is the case. Ask follow-up questions to understand the whole story and evaluate the situation.