Preparing For First Contact With A Franchisor

You get only one chance to make a first impression. So does the franchisor.

That's why, after selecting which franchise brands to investigate, it's so important to evaluate the franchisor's response at every point of contact. Whether that contact is by email or by phone, the way a franchisor responds to your initial inquiry is often (though not always) an indicator of how they will treat you if you become a franchisee in their system.

The first contact is usually online, through the franchisor's website. In most cases, you initiate the communication by filling out an online form. Franchisors will request your basic financial information (net worth, liquidity), history in their industry, management experience, requested locations, and more. Their primary purpose is to weed out those who do not qualify, most often based on their finances.

There is no reason to divulge too much personal data at this stage. Franchisors are merely trying to save their time and yours. If you don't possess the required net worth and liquid assets, there is no point in the franchisor following up. It's the first screen.

In fact, some franchisors will disqualify prospective franchisees based on how they fill out the online form. Their thinking is this, and they have a case: "If this person can't even follow directions and properly fill out a form, how will they ever follow our franchise system?"

Most franchisors today will follow up your initial inquiry with automatically generated emails, slowly introducing you to the concept - and further qualifying your capabilities, timetable, desired geographic area, and level of interest in their brand. These emails are crafted to evaluate your response at each stage, as well as to inform you further about the franchise opportunity.

Then there's the website itself. Is it easy to navigate? Is there one-click access to a separate franchise page? Is the material laid out cleanly and clearly? Is there a FAQ page? Does it answer all or most of your important questions? Are there testimonials from franchisees? The website is designed to entice qualified prospects by providing enough information to keep them interested, but not give away the store. That will come later in the initial phone call with a franchise sales representative.

The first stages of contact with a franchisor should be a time for you to get answers to your biggest, most important questions: "How much money can I make?" "Is there a territory available where I want?"

This is also a time to determine if your personal and financial goals and values match those of the franchise organization. These are the people you are considering partnering with for 5 or 10 years or more years to build your financial future. Their culture, and your fit with it, will be crucial in building a healthy, long-term relationship.

A good franchise organization is interested in the long term, in the revenue generated over the years through ongoing royalties - not in collecting one-time franchise fees. (These are supposed to cover only the franchisor's costs involved in training you and helping you get started on the right foot, marketing, and a premium for the brand name and operating system - which is what you're buying). Why does McDonald's, for instance, stand head and shoulders above its competitors? Not so much because of the quality of its food as the power of its brand and the quality of its operating system.

Remember, you are betting a large portion of your financial future on the brand you choose, so be selective. There are about 3,000 franchise brands out there in virtually every business sector. So if you get the feeling that the people you encounter at the brand of your choice are not the type you'd like to deal with for the next 5 or 10 years, consider other brands. Yes, it's about making money... and it's also about lifestyle, values, and goals, and the people and organization you will feel comfortable with in the long term.

Next: The Interview: What you should ask the franchisor, and what the franchisor should ask you.

7.2: Creating A Business Plan
7.4: The Interview: What You Should Ask the Franchisor

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Multi-Unit Franchisee Magazine

Issue IV, 2015

Multi-Unit Buyers Guide    

2015 Multi-Unit Buyers Guide

Special Edition

A Franchise Update Media Group Production
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