In this episode of Franchise Secrets, we will talk about the step-by-step process of buying a franchise. Are you ready to purchase a franchise and want to know what the process looks like? Do you know what information to look for—and what they are looking for from you? From differentiating yourself from the crowd as a possible franchisee to understanding the franchise disclosure document, we have you covered with this insiders guide!
Lance Freeman will be joining us today as our expert in the industry. Lance has navigated every area of the franchise sales process: working as a franchisee, a regional developer, and now President of Franchise Development at St. Gregory Development Group. This wealth of experience makes him uniquely qualified to walk us through the steps. Listen to part one of our two-part series with Lance now!
The first path—and possibly the quickest way—is to do a google search and locate franchise opportunities in your area of interest. Or perhaps you have a specific business you’ve wanted to become a part of. This is a more organic way of beginning the purchasing process. If you reach out to a particular franchise at this point you’ll most definitely feel as if you are being sold a product.
The second means of locating a franchise opportunity is to reach out to a franchise consultant. If you’re newer to the process this can be a great step. They typically have connections in the field and experience doing exactly what you want to do. A consultant can help point you in the direction of the best fit for you. Listen on as we talk about the two options and help you decide which route to take.
The beginning of this process can be very intimidating—it’s usually a conversation with the president of the brand you’re interested in. You need to look at this conversation as an immediate opportunity to gain insight into the business. More importantly, the president will want to get to know who you are, what your experience is, and what qualifies you as a prospective franchisee.
You want to be prepared to discuss yourself in-depth, but also do your research into the brand. They want to speak to a candidate who has some knowledge in the business even if they are new to the entire process. A willingness to do hard work up-front and prove you are able to learn can go a long way. Keep listening as we discuss some of the things you can do to stand out in a selective process.
The next step in the process is understanding the economic model for the business. A franchisor is required to provide you a Franchise Disclosure Document (FDD)—which we talk about on this podcast. It contains all the legal things you need to be aware of. Section 5 covers the initial fees that may be incurred.
Section 7 includes everything entailed in the initial investment of the business.
Familiarize yourself with this document and this section. When you reach out to franchisees you can and should be able to discuss this in-depth. Understanding the numbers up front will act as good talking points and prove that you’re more than just a novice asking questions. Continue listening as talk about the sections in the FDD and how you can best understand them.
When reaching out to someone who owns a franchise in the brand you are interested in, make sure you are accommodating and respectful of their time. Ask them if they’re able to squeeze you into their schedule. Be flexible. Remember, they are taking time out of their work or personal life and devoting it to you! When you connect with them be sure to ask specific questions.
No one wants to hear, “So what do you make in a year?”
Not only is it vague, but there is no good answer to that question because there are too many variables. Instead, focus your questions on what the role looks like day-to-day. How much time should you expect to invest in a week? How much support do you receive from the franchisor? Do you have a good understanding of the initial investment? Keep in mind, franchisees are mentally evaluating you as well. The more knowledgable you are, the more you stand out as a potential addition to their team. Listen to the rest of the episode as we cover the important questions to ask and what they are looking for.