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The Interview: What the Franchisor Should Ask You

The questions a franchisor asks you in the initial phone interview reveal a lot about their motives and values. Listening carefully, and asking your own questions, can help you find a franchisor partner who understands that their success depends on yours - and avoid those who don't. (See last week, Part 1, What You Should Ask the Franchisor.)

  • What are your goals? You have goals, and the franchisor has goals. Are they compatible? Can you help each other achieve what you each want? The franchisor's primary goals are a successful unit that generates an ongoing royalty stream, and a good long-term relationship with their franchisees. Your goals may be the same (ongoing profits and a good relationship), and they also are more complex. Do you want to just "buy a job"? Are you starting a business with the idea of hiring family members, and passing it on to them at some point? Are you looking to own one unit and build up that business, or acquire many more units in the coming years? Knowing your goals going in will provide the answers to many questions as you evaluate the franchisor and the franchisor evaluates you.

  • Do you have experience in franchising? By now you must realize that franchising is a business model that differs from both corporate and self employment. Some people cannot adapt to franchising, where you run your own business, but under the restrictions of the franchise agreement. If you have already been a franchisee, or worked in some capacity for a franchise company, you will have a better chance of knowing if you're cut out for life as a franchisee.

  • Why this business/industry/sector? Do you love the industry? Are you passionate about car repair or child care? Cleaning homes or running a restaurant? Are you suited for high-intensity, fast-paced retail? Good franchisors value passion as a key ingredient in the success of their franchisees - and they especially value candidates who have it.

  • Do you have experience in this industry? Whether it's serving food or running a rental center, cleaning houses or operating a day care facility, experience is always a big plus. Sure, any business or trade can be learned, but combining industry-specific knowledge with the strength of a good franchise system is a powerful formula for success.

  • How hard/long are you willing to work? This question is supremely important. Most franchisees don't make money in their first year, at least not a lot of it. Those who do succeed earlier on the curve tend to put in more hours each day, each week, and each month during their startup years. Successful multi-unit franchisees who look back on their earlier days often speak of 60- and 70-hour weeks - especially in retail and food. If you are not willing to work those hours, consider a Monday-to-Friday, B2B, 9-to-5 brand.

  • How does your spouse or partner feel about this? Having the support of your family - most importantly your partner or spouse - is a powerful intangible asset you bring to the table. Some franchisors will require the candidate's partner or spouse to be on board, attend certain meetings, and even accompany the candidate on Discovery Day.

  • How do you expect to build a customer base? Success in franchising - retail or service - depends on finding and retaining customers. The franchisor wants to know if you understand and are willing to make the commitment to marketing the business relentlessly. Will you knock on doors, spend for advertising, support community activities and local causes? If you hire a manager, will you first look inside your territory to find someone who understands who your customers are and what they want?

  • How will you finance this? Since profits in the startup years can be slim, it's important to have cash reserves, not only to keep your fledgling business growing, but also your personal and family life on an even keel. That's why franchisors ask about your net worth and liquidity: they want to know you have enough to get going, and to keep going. If the franchisor seems more interested in getting hold of your franchise fee and not in the ongoing royalty stream your successful unit will generate, consider another brand.

  • Do you expect to make money in your first year? This is pretty simple: most franchisees don't. If a franchisor makes representations to the contrary, run the numbers. Talk to the brand's franchisees and ask them about their first year. Then run the numbers again.

  • Do you have experience in this industry, with management and leadership? Money is necessary, but it is not enough to succeed as a franchisee. Good franchisors will turn down candidates with deep pockets who lack what they consider the right experience or the attitude they have seen in their successful operators. Successful franchisees must be great operators and also know how to manage a business and lead a team of employees. If you don't have it all, be prepared to find a partner or manager able to round out the skill sets needed for success.

  • Why choose us? With 3,000 brands and 75 industries to choose from in franchising, a good franchisor will want to learn more about your reasons for knocking on their door. They should ask why you chose their industry and why you chose their brand within that industry. While "loving" the brand/having a passion for the brand is a powerful motivating force, by itself this is no guarantee of success (see above).

  • Why do you consider us a good fit? Finding a franchise brand that "fits" involves values - yours and theirs. Companies, like people, have their own culture and values, and you have yours. With all the franchise opportunities available, franchisors should want to know why you came to them. Success, for both franchisor and franchisee, depends on a healthy relationship.

  • When are you looking to open? Timing is important not only to your own financial future, but also to the overall growth plans of the franchisor. A franchisor looking to expand into a new market or penetrate more deeply into an existing market may be in more of a hurry than you are -- which can work against you. It also can work in your favor, as franchisors have been known to offer discounts on the franchise fee and/or royalties available in selected markets.

  • What territories or areas are you looking at? Home court advantage says a lot, whether in sports or in franchising. If you know the area where you'll be doing business, your odds of success will be greatly improved. Franchisors know the added strengths local connections and community involvement bring to the party.

  • What is your exit strategy? As strange a question as this may seem for someone just starting out, savvy franchisors understand the importance of beginning with the end in mind. Older brands have seen thousands of franchisees come and go. Eventually, you will sell your franchise unit (or units), whether to family, another franchisee, the franchisor, or a complete stranger.

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