If you're considering buying a franchise, you're going to need to talk to franchisees.
"All the real answers you need come from the franchisees," says franchise consultant Joel Libava. "They wrote the check before you and took the risk."
But how do you get these total strangers to give you the honest, gritty lowdown on their business? Here are some key strategies:
- Be prepared and professional. Don't waste franchisees' time, says franchise consultant Gordon Dupries. Make sure you are financially qualified and the territory you seek is available before you contact franchisees. Reassure franchisees that you will keep what they say confidential. Demonstrate you are serious by mentioning other franchisees or corporate contacts with whom you've already spoken.
- Start far away. The most important franchisees to talk to are the ones nearest to your target market. So visit them last, after you've honed your interview technique on other franchisees, says Libava. "People want to go visit the franchisee down the street right away," he says. "But don't--you'll blow it."
- Build a relationship. Begin by simply getting to know the franchisees. Dupries suggests opening by asking the franchisee how it felt to become self-employed, and whether franchise ownership is delivering the lifestyle he or she had hoped. To break the ice, BrightStar franchisee Lidia Kolarikova, 34, says, "I asked them about their background, what they did before and how long they'd been with the company."
- Ask general questions. If franchisees don't want to provide hard numbers, ask them to compare their experience to the franchisors' stated averages: Compared to the Franchise Disclosure Document, what were opening costs like? What is typical for earnings? This type of question allows franchisees to give an answer that's helpful without having to supply actual figures.
- Hypothesize. Instead of asking about the franchisee's experience directly, Libava says, pose possible scenarios: "If one were to open an xyz franchise in Springfield, could one expect to show a $20,000 profit in the first year?"
- Assemble the puzzle. Ask one tough financial question of each franchisee you meet. If you ask one "How much working capital did you need?" ask the next "What should I expect to pay for labor?" and so on, until you have a complete picture.