Are Your Prospects Asking the Right Questions?
When franchisee prospects begin their research into franchise brands, they're often clueless about what questions to ask their franchisor, or what to ask franchisees during validation. We asked Brian Sommers, vice president of franchise development at Jersey Mike's Subs, what questions he considers essential to completing a deal that works for both the franchisor and prospective franchisee. Here's what he had to say.
Ensuring the brand is the right fit for each prospect is essential. Prospects need to fully understand what they are getting into. They should investigate and figure out the business model, the franchisor/franchisee relationship, the franchisor's role and responsibilities, and the unit economics.
From the franchise development professional's perspective, it is important to understand the prospect's plans and manage their expectations beginning with their capital plan. Do they understand the capital requirements and the cost of entry? Where is their capital coming from? This is an area they do not want to underestimate.
The most important piece of any business is its people. Prospects need to be able to attract the best crew possible to represent themselves and the brand. Up front, prospects should consider: What are their expectations for their involvement in the business? What do they see as a realistic work schedule?
What is their people plan? Who will be involved in daily operations? Will management be incentivized? What is a good crew? How are you going to recruit them? There must be a major focus on the people plan.
The best and most valuable information typically comes from existing franchisees. Before approaching them, the prospect should truly understand their own strengths and weaknesses to see how they line up with those of the franchisees. Are they similar?
The prospect should speak with as many franchisees as possible - single-unit, multi-unit, successful, and challenged - to begin understanding the common denominators. What do they like about being a franchisee? What do they not like? Are they satisfied with the franchisor? How are franchisor/franchisee relations? Remember to tell them to speak with franchisees who are new to the system as well as those who have been on board a while.
The best discussions happen when the prospect asks second- and third-level questions. When a franchisee answers a question, it is the prospect's duty to drill down to why the question was answered that way. For example: Are you happy with the franchisor? Find out why, or what makes them happy/unhappy. Then ask for real-life examples and situations.
Unit economics/ROI is critical. Find out if the franchisees are satisfied financially. Then, using second- and third-level questions, ask if they are above or below the system's average unit volume.
My favorite question to ask a franchisee at the end of the visit: Would you do it again?
Brian Sommers is vice president of franchise development at Jersey Mike's Subs, based in Manasquan, N.J. For more information, call 732-223-4044 or visit their website.