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Top Mistake to Avoid in Franchise Validation

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6 min read

By the time you get to franchise validation, you have done a lot of work. You identified all of your wants and don’t wants. If we were helping you, you have a model that articulates your perfect business and you’re exploring franchises that are a good fit at first glance. You’ve had a handful of conversations with the franchise company, and you’ve received the FDD. Now you’re ready to start talking to current owners in what’s usually one of people’s favorite parts of the franchise investigation – validation.

Validation is your chance to get the good, the bad, and the ugly so you have enough information to make a quality decision. Here are a few common mistakes and how to avoid them.

You Don’t Speak to Enough Franchise Owners

It’s important to speak to enough franchisees that you can see trends emerge. Are the franchisees general positive about the support and culture? Are there common concerns that you heard several times that you need to address with the franchise company? Can you see consistency in the financial growth over time? Do you have a clear picture of what the owner’s roll is in the business? If you have that information, you have likely done enough calls. If your information is from just one or two franchisees, it’s time to pick up the phone and call a few more.

You Evaluate the Franchisee and Not the Model

Another common mistake I see people make when speaking to franchise owners is forgetting the purpose of the call. You are not there to evaluate the franchisee. You’re there to find out if you are willing and able to do what it takes to make that business a success, and if the franchise support is sufficient to help you learn, develop and grow a profitable business. It is easy to get caught up in the individual’s strengths and your perception of their weaknesses, but remember to focus on the tools that they have and how they’re using them.

Ask questions about the support, culture and systems. Find out how they’ve used them and what impact it had on their business. Use the knowledge gained from the previous calls to ask specific questions about the tools the franchise company offers to see how it’s working in the real world. If they’re not using it, find out why. This is your chance to see the company’s support in action. Just remember that you’re not working for or with the franchisee, and how they operate is not indicative of how you will operate.

You Don’t Call Unhappy Franchisees

Every franchise model has an unhappy or unsuccessful franchise owner. You want to find someone who is not doing well to find out why. You may learn that they weren’t following the processes the franchise company developed. They may have personal issues that kept them from fulfilling the owner’s roll, or you may find some flaws in the system. Find out what differs between the owners who succeed and the owners who fail. Then do some honest self-evaluation. Who is more like you? Are you a maverick or are you willing to follow a proven process? Will you let life’s speed bumps be a roadblock or will you push through? Do you see the failure as the franchisees or the franchise company’s responsibility? You will learn a lot about a company from the franchisees who aren’t doing well, so it’s important to spend some time finding them.

You Don’t Verify the Information You Heard

Here’s the biggest mistake I see. You don't verify the strangers on the internet or franchise company's information. The reason it’s called validation is you are supposed to validate everything you’ve heard and read about the business right from the people who live it. If the FDD’s Item 19 gives you earnings claims, see where the franchisees you’re speaking with fit. The Item 7 provides estimates for investment; ask what it costs them to get up and running and what carrying costs were until break even. If the company gave you an average customer retention, talk with the franchisees about their retention and what causes the variance. This is your chance to see under the hood. Take advantage of it!

You Don’t Ask the Uncomfortable Questions

Many of us were trained not to ask about money. I get it. However, this is not the time to remember that lesson. Think about it from the business owner’s prospective. They went through the exact same process at some point and likely felt uncomfortable asking some of the exact same questions. They understand why you’re asking, and most franchise owners are comfortable answering behind the scenes questions. It’s okay to ask them respectfully if the answer is important in your research. Then, remember how you felt asking those questions and repay the courtesy to prospective owners when you’re asked.

You Get Analysis Paralysis

A common mistake I see is feeling like you need more information when you have every question answered. It usually comes from a place of fear, and I have seen people search for answers to impossible-to-answer questions as a way to stall making a decision. It’s usually not about the information and most people have no idea that’s happening. If your questions are answered and you have a clear picture of the business, it’s time to make a decision. If it’s a good fit with your model and puts you in position to reach your goals, move forward. If it’s not a match, cross it off the list and move on to the next.

Follow these simple tips to get the most from validation. If you haven’t started looking at franchises yet or you’re curious if it’s an option for you, we can help.  Contact us to schedule an appointment for a free, personalized consultation or to receive a copy our free ebook, Career Transition Guide. We can’t wait to help!

Written by

Jessica Houston

Business Coach

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