What questions should I ask franchisees about their business?

When considering a franchise opportunity, one of the most critical steps is speaking to existing franchisees.

They can provide first-hand insight into the business, the franchisor and what daily operations are really like. Here’s a comprehensive guide, drawing on the expertise of leading franchise professionals…

Accessing franchisees: How much can you expect?

Many prospective franchisees worry about whether a franchisor will provide a full list of their network. Suppose you are still in the early stages, and perhaps haven’t even completed an application form or had an initial meeting at the franchisor’s office yet. In that case, it may be reasonable for the franchisor to withhold the list.

As Brian Duckett, former chairman of The Franchising Centre, explains, “After all, the franchisor won’t want his or her franchisees being bothered by people who may be unlikely ever to be judged suitable to join the network.”

However, once you are further along in the recruitment process, Duckett advises you should expect more transparency. “If any franchisor won’t provide you with a full list, and cannot give you a valid reason (and I’ve never heard one), all I can suggest you do is look for another franchise opportunity.”

Vicky Wilkes, head of legal at Aston Villa Football Club, adds that “there is no legal obligation on the franchisor to provide a list of its franchisee network, either before a potential franchisee joins or during the franchise, unless the franchise agreement specifically provides for it, which is very unusual.”

Many franchisors, however, will provide the contact details of a sample of franchisees, usually a mix of high performers and those with more challenges, so you get a balanced view.

Do you need permission to contact franchisees?

Legally, you do not need permission from the franchisor to speak to franchisees. Duckett explains: “You are quite at liberty to write, email, telephone, or walk into a franchised outlet and ask the franchisee what they think about the business - and the franchisor - whenever you feel like it.”

However, approaching franchisees through the franchisor or arranging an appointment is often more effective.

“You are much more likely to get a polite response if your enquiry is expected and comes about following an introduction from the franchisor. Or you have at least made an appointment, explaining what you want to know and why.”

What to ask franchisees

When speaking to existing franchisees, it’s important to ask questions that go beyond finances. Duckett suggests open questions about how well the franchisor supports their franchisees, what the overall state of morale is within the network, how well and how often franchisees get together, and so on.

Other crucial questions include:

● Did the franchisor fulfil the promises made during recruitment?

● How accurate were the financial models provided?

● How effective was the onboarding and training process?

● How do franchisees see the network developing in the future?

He adds: “Talking to existing franchisees has always been the most important part of recruitment process research.”

Finding franchisees beyond the list

Thanks to online research, it’s possible to contact franchisees even if the franchisor does not provide a full list. Duckett notes: “Social media and websites enable you to track down just about any of a network’s current franchisees. It may even be possible to find some ex-franchisees to contact to find out why they left the network.”

This approach gives prospective franchisees a broader, more realistic picture of what it is like to operate within the network.

Understanding financial insights

While financial performance is sensitive, it is still a key consideration. Shelley Nadler, legal director at Bird & Bird, advises that a franchisor should be prepared to disclose actual financial performance figures that have been achieved by franchisees. “Although it should not identify any franchisee without their consent,” she adds.

Duckett adds that seeing real-world results is important: “What you want to see is what has actually been achieved, whether from company-owned or franchised outlets.”

Even if full figures aren’t available, looking at averages across the network and understanding the assumptions behind financial projections can help you make an informed decision.

Conclusion

Speaking to existing franchisees is arguably the most important part of evaluating a franchise opportunity. They provide insight into day-to-day operations, franchisor support, network morale and realistic financial performance.

As Duckett reminds us: “Even if you did no other research on the franchise in question, you must talk to as many of the existing franchisees as you can – even some of those who have left the network if the franchisor will let you have the details.”

By conducting thorough research, asking the right questions and approaching franchisees respectfully, you can gain the insight needed to make a confident, informed decision.