What is the Franchise Sales process?

The franchise industry can seem very daunting to many people. There are thousands of options out there-how do they know which one is best? And how do you make sure you’re getting all the information?

I worked with a very smart entrepreneur about 10 years ago who had built up a real estate empire in Texas. He built his own company from the ground up, and this was the first time he considered franchise options.

He said to me, “Franchising is the most transparent industry I’ve ever researched.”

That is such a great point! However, it doesn’t feel that way to many. It can be overwhelming, and most people don’t know where to find the appropriate information or questions to ask.

Here are the 6 most important steps of researching a franchise:

1. A mutual evaluation.
2. Most people believe that they are going to be “sold” a franchise and worry about providing too much information to the franchisor. The first step of researching franchises is to understand that the best franchises will be interviewing you, just like you’re interviewing them. A franchise does not work without a great franchisor/franchisee relationship. Ask the hard questions, get to know them, and share about yourself and your goals. This is one of the most important steps of the whole process.
3. FTC Regulations and reading a Franchise Disclosure Document
4. a. This can be very daunting for people new to the franchise industry. Here’s the simple version: The FTC regulates the franchise industry, so franchisors have rules to follow in how they provide information to potential candidates.
5. b. One of the most important parts of this regulation is that a franchise company may or may not disclose earnings information based of franchisee performance. Whether they do or not, you will have the ability to gain financial information from existing franchisees.
6. c. The FDD can be overwhelming to read at first. They get much easier once you read more than one, as they are all organized in the exact same format. Use it as a reference document and refer to it as you move your way through this process. It will make more sense as you learn more.
7. Let’s get educated!
8. a. This part is typically a series of phone calls or webinars designed to teach you all the important aspects of support and becoming a franchisee. For example, Marketing, Real Estate, Technology, Training, etc. You may even “meet” directors of departments to learn how they will support you if you decide to become a franchisee.
9. b. This part of the process is designed to give you more information so that you will ask better and more educated questions when you talk to franchisees.
10. Time to validate!
11. a. You made it! This is the best part of the entire process: talking to existing franchisees. You may listen to conference calls or have one-on-one conversations, depending on the franchise. This is your time to really explore the people, the culture, and learn about their experiences.
12. b. Prepare! It’s important to prepare for these calls, so that you can make the most of your time and the franchisee’s time.
13. How to prepare:
14. i. Make a list of questions to ask franchisees (example marketing, support their background, biggest challenge, are they on track to accomplishing their goals, etc.)
15. ii. Think about who you’d like to talk with (newer or more established franchisees, franchisees in similar markets, similar backgrounds, etc.)
16. iii. Call enough people that you feel comfortable with the systems, support, and culture of the company. The best thing you can hear is, “Follow the System because it works!”
17. Let’s get to know each other
18. a. At this point, you most likely will have narrowed it down to one franchise concept. You’ve learned about their systems, processes, support, and hopefully talked to several franchisees. You should feel positive about the company, the people, the support, the financials, and are starting to envision yourself as a franchisee.
19. b. Before you make your final decision, most franchisors require a Discovery/Meet the Team Day. This is an opportunity to “Meet the Team”! You will fly out to their headquarters and spend a day with the management team. At the end of this day, you should have a better understanding of the support, the culture, and really believe that this is the franchise for you.
20. c. Most franchisors will have a meeting with their management team to approve you as a franchisee. They should have a decision to you within a few days if you have been approved to join the team!
21. The Roller Coaster moment
22. a. You’ve done your research, you’ve talked to franchisees, you’ve analyzed the financials, and you were approved by the franchisor management team. Congratulations, you’re almost there!
23. b. This is the hardest part of the process. You are so close to saying yes, but anxiety and doubt will creep in. You’re making a big decision, and you don’t want to make the wrong one.
24. c. It’s important to be able to make a decision at this point. The longer you wait, the harder it gets. If you believe that this is the right franchise and you want to join the team, say yes! If you don’t think this is the right company or the right time, say no thank you. As a business owner, you will need to be able to make decisions every single day. This is your first step to living your dreams. Go for it!
25. This process may seem overwhelming; however, this is where I can help! I am here to help you go step by step and make an informed decision whether franchising is right for you or not.