If you were on safari, your best friend would be the guide. If you stay close to the guide, you learn things. You know, based on your proximity, that a lion or bull elephant will not come charging out of the bush. Otherwise, the guide, who has intimate familiarity with the area, would be taking another route. The guide is knowledgable, knows the territory, understands the habits of the creatures around and is aware of any danger signs. What the guide imparts to you, gives you a greater knowledge and a deeper understanding of the area. When you exploring the franchise sales jungle, staying close to the guides is also your best bet.
Franchise Sales – It’s a Jungle Out There
Ideally, franchise sales should benefit both the franchisee and the franchisor. In the real world, you, the one looking into franchise sales, need to be armed and ready. You’re in unfamiliar territory, so be ready for anything coming out of the bushes:
- The Sales Pitch – You can hear anything at a franchise sales office. Take nothing stated as the pure-as-the-driven-snow truth. Make sure spoken words match words on paper. Listen with your brain, not your desires.
- Find Unhappy Franchisees – Don’t seek out happy franchisees, look for unhappy ones. Be bold and ask questions when you find one. It may be the franchisor that’s the source of their problem but then it may be themselves. Learn to recognize the difference. If you find several that are displeased, take another path. If you don’t find any, stick to the path you’re on.
- The Financial Disclosure Document – The FDD of the franchise should be offered to you early. It tells many tales. If it isn’t offered and you have to ask for it, that may be a warning. The FDD will tell you about the company’s earnings, their financial health, how many units opened, how long it took for them to open, how many failed in their first year and a wealth of other franchise sales information.
- Litigation – Lawsuits happen. If your particular pick of a franchise has one or two pending or has had them in the past, it may be no big deal. If there has been a history of them brought by mostly customers, it is an indication the franchisor has a recurring problem that has not been addressed. If the lawsuits are mostly from franchisees, the same problem exists — one that hasn’t been addressed. This information can also be found in the FDD.
- The Contract – Study this document carefully. Let an attorney examine it as well. There may be things that can turn around and bite you. If the franchisor is willing to bend on price or other items it can be a warning sign. Giving you a better deal than another got is a good way to stir up problems within the company. Everyone should get the same deal. This is a good sign if the franchisor is unwilling to bend — he or she is confident in their business model, the brand and the organization.
Question your guides, get as much information as possible. Stay close to the facts and don’t be afraid to ask questions. Keep emotions out of all your dealings. Franchise sales can be deceiving as a hyena or straightforward and honest as a lion. Educate yourself to know the difference and you’ll exit the franchise sales jungle a lot smarter than you went in.
