When you embark on your journey toward franchise ownership, our team at FranCoach will be your closest ally throughout the process. We will guide you through our tried-and-true Discovery Process, during which you will be paired with multiple franchisors so that you can explore a few different business models and find the one that’s right for you.
To learn more about the Discovery Process, check out this episode of our Franchising 101 podcast. Or, of course, you can keep on reading…
The Initial Discovery Process
2 weeks – 2 to 3 conversations with each franchisor
It is crucial to keep an open mind and learn as much as possible about each franchisor during the Initial Discovery Process. The entire Discovery Process is about learning, not making a decision. In fact, you should never have to make a decision. That is right – you should never have to make a decision during the Discovery Process! By sticking to the proven steps of our Discovery Process, we will create the clarity you need to know which business model is right for you.
Below is a rough outline of what to expect:
Each franchise developer will reach out usually within 24-48 hours after we introduce the franchises to you. It is imperative that you engage with the franchisor right away to schedule a time to speak.
Remember: Franchises are awarded and just not bought and sold. We want the franchisors to be excited about the possibility of you becoming a franchisee. This can help put you in the driver’s seat for any future negotiations.
You will speak to the Franchise Developers to receive an overview of the business model, franchisor history, owner role, sales, marketing, training, and support, as well as the competitive advantages and market demographics.
You will want to hone your elevator pitch for the Franchise Developer – this is your chance to shine by outlining your background, skill sets, and goals.
You will exchange information with the Franchise Developer.
You will gain access to detailed information on the franchisor via websites, webinars, and proprietary documents.
You will gather your basic qualifying financial information and pertinent professional documentation.
The franchisor will release the Franchise Disclosure Document (FDD), and you will participate in follow-up calls with the franchisor.
The FDD is a detailed document written by a team of attorneys that is heavily regulated by the Federal Trade Commission (FTC) and must be registered and approved in every state in which the franchisor does business. Don’t worry – FranCoach will provide a document to help navigate the FDD and we will have numerous conversations to help understand all the information contained in the FDD.
You will participate in FranCoach Update Calls to debrief and prepare for the next steps. These calls should happen at least once a week but can occur as often as the client needs.
At this point, we typically have enough information to know if business ownership is a real possibility for you. Also, we will have learned enough about the franchises to know if we should continue the conversations. The easiest way to know if we should continue vetting a franchise is if there are unanswered questions – are there new things to ask, are there things that require more clarity, or are there unexpressed concerns? If there are any of these, it is wise to take the next step with the franchise. The answers to these questions will determine if we continue the discussions with the franchise or if we focus on a different brand.
Franchisor Validation Process
2-3 weeks – 5+ conversations
The next phase of the Discovery Process is the Franchisor Validation Process. Here’s what to expect during this phase:
You will typically speak with other franchise executives – this is very much a mutual interview.
With some franchisors, this is the one part of the process that can feel a little bit like a corporate interview. You will still be able to ask the executives your questions (in fact, much like a corporate interview), and they will form an opinion of you as much by your questions to them as by your answers to their questions.
You will speak with existing franchise owners. This is a major part of the process as it will allow you to compare what you have heard from the franchisors and read in the FDD with that of existing owners. Owners can also typically answer more specific financial questions that the franchisors are not legally allowed to answer.
Depending on the franchisor, these can be live one-on-one calls, conference calls with several potential franchisees and an owner, and/or recorded calls with owners.
You and the Franchise Developer will map territories/locations and discuss the number of units that you would like to start.
You will continue to participate in FranCoach calls – these tend to be more frequent in this phase, as it is usually easier and more helpful for us to speak after each call with a franchisor. It is our job to help ensure you are asking all the right questions and that you are gaining a true understanding of the potential of the franchisors as it relates to your goals and objectives.
Again, we are going to work together until we find the best option for you.
Moving Forward
At this point, we are nearing the end of the Discovery Process and should have the following:
An understanding of your role as an owner as well as a belief in the business model.
A solid knowledge of the training, support, culture, and values of the franchisor.
A vision as to the start-up and scalability of the business.
A comfort with the territories and locations for your new business.
A detailed proforma outlining the financial potential.
So now what? In most cases, it will be time for one of the final steps in the process – Discovery Day.
Discovery Day/Meet the Team Day
Franchisors typically hold these every 4-6 weeks – it is critical to attend the next available event to secure any locations/territories you have discussed with the Franchise Developer.
Discovery Day, also called Meet the Team Day, is an event for potential franchisees and will be held either in person at the franchisor’s headquarters or virtually.
Attending Discovery Day allows you to get to know the franchisor’s executive team – and for them to meet you (and your spouse, partner, family, or business partner, if applicable).
During the event, you will have a hands-on view of the business, the owner role, and the infrastructure the franchise will provide – as well as the training and support.
You may also get to interact with other potential franchisees. This interaction can help to validate what has been learned during the process and can be the beginning of friendships and support from other future owners.
For all of the information exchanged at a Discovery Day, the main thing we want you to focus on is the people. Do the people within the franchise seem like they know what they are doing, does it feel like they will have your back, and are they people you want to be in business with?
Within a few days after Discovery Day, an offer to be awarded a franchise will be presented (sometimes this happens even before or directly after attending the event).
Funding Options
Ongoing
Let’s be honest: No matter how great one of the franchises might be, without the ability to fund it, this process is a waste of time. The beginning of the Discovery Process, therefore, is typically the time to take a deeper dive into funding so that you know what options are available, what your investment range is, and what the timeline is to be funded.
To gain this information, FranCoach typically recommends an initial conversation with one of our funding partners at the start of the Discovery Process. The conversation with our funding partner will provide the basic knowledge of options available, but it is also designed to give you the confidence to know the franchises we are looking at can be funded.
There are numerous ways in which a franchise can be funded, and at this point, we have probably discussed some of them at a high level. Below are a few of the most common funding methods:
SBA and SBA Express Loans: the SBA Express is for non-brick and mortar franchises and is very easy to qualify for. The Express Loan is for $150K. The primary requirements are a minimum credit score of 685 and the ability to put a 10-20% cash injection into the business ($15-30K).
A Retirement (401K/IRA) rollover. When used to start a business, this rollover is not penalized and taxed as a straight cash disbursement would be.
A home equity line of credit
Line of credit on a stock/bond portfolio
Equipment financing
Term loans
Business lines of credit
Ready to learn more about franchise ownership? Get in touch with our team at FranCoach today.