When reviewing a franchise business, the franchisor will provide you with plenty of information. But to get more insight into an organisation, it’s a good idea to speak to existing franchisees and ask them a few questions. This a vital part of your Due Diligence on the franchise system.
Current franchisees have been through the same process you’re going through, and they can also provide you with real insight into the day-to-day operations of the business. They have a good understanding of the business profitability, and can also let you know about the culture of the organisation and the relationship they have with the franchisor.
Where to find Franchisee Information?
The primary purpose of a Disclosure Document is to give a prospective franchisee important information about the franchise system.
Under the Franchise Code of Conduct, every franchisor is required to list all existing Franchisees details such as names, addresses, telephone numbers and the year when the Franchisee started operating the franchised business.
If there are more than 50 franchises, the franchisor may instead give details for all franchisees in the state, territory, region or metropolitan area in which the franchise will operate.
You should also be able to access former franchisee details unless they have expressly asked the franchisor not to disclose this information.
Example of Questions you can Ask
Existing franchise owners will most likely welcome a discussion with a prospective franchisee. They have been through the same process as you and they know that talking to existing franchisees is a critical part of your Due Diligence.
Existing franchisees might be receiving many calls from prospects wanting to ask questions. So it might not always be possible to catch up for coffee or have an hour long conversation.
Keep it simple, introduce yourself, be polite and ask for a convenient time to discuss.
Here are some examples of questions you may want to ask a franchisee:
- How was the training? Did you find it prepared you well to operate the business?
- Could you tell me more about the franchisor’s support? Are they easily contactable when you have a question? How would you rate the support you receive from your franchisor?
- What was the first year of being in the business like?
- How long did it take to get a return on investment?
- How many hours a day/week do you work in the business and is it more, less, or about what you expected?
- Were there any unexpected costs or hidden fees?
- Why did you select this franchise system over another?
- Does the franchisor providing regular training on new products/services?
- What do you think of the marketing? Does the franchisor make a presentation of the marketing activities every year for the upcoming year?
- And finally, if you could do it over again, would you buy into this franchise?
Often franchise failure occurs because of lack of due diligence.
If you are considering buying, download our FREE Ultimate Due Diligence Checklist today. This document guides you through 43 points and covers all the essential areas you should be assessing before investing in any business Download here
Other Franchise Resources
In addition to having your conversations with franchisees, take a look at the awards the franchisor may have received. Awards are an objective indication of the overall performance of a franchise system. They also tell you a lot about the franchisor and their ability to keep a consistently high standard of services and support among all their franchisees.
Talking to existing franchise owners is a critical part of your decision-making process. Don’t skip it!
Why not tell us more about your current situation and where you want to be. Our experts can help you identify if Kwik Kopy is right for you.
Reach out to Peter Fiasco on 02 9967 5500 or by email on franchise@kwikkopy.com.au
He can help you find the right business to suit your budget and aspirations.
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