On today’s Franvesting podcast, David Stein interviews Ardag Tachian – Franchising Insider. Our goal at Franvesting is to help you gather the right information to make the best decision for your business investment.
What qualities and traits are important for a potential franchisee?
Certainly, a person’s ability to follow a system are extremely important to becoming a good franchisee. You are paying into a system, so make sure you want to take advantage of that.
A good franchisee has a great knack for delegating, especially if you want to grow.
Certain personality features make for great franchisees. For example, positivity and resilancy, as evidenced by the times we are in. Having thick skin is also key. Most importantly is being a people person, somebody who can build relationships is extremely critical from a marketing standpoint.
From a franchisor perspective, what kind of questions would you like to ask a potential franchisee to see how they line up with a particular system?
The relationship is likened to a marriage, as you will be signing a 10-20 year contract. You will definately get to know each other. I always like to know how people found our franchise. Certainly need to know about the financial background, education background and see if they are a good fit for the franchise. Exploring a prospects expectations of what they expect out of the franchisor can reveal how the partnership may grow or not be a fit.
Ardag then goes into a deep dive into the courtship process with the potential franchisee…. from initial inquiry to closing the deal to building the new franchise. Each step is designed to evaluate fit and appropriateness and to establish the foundation for a great franchise relationship.
As a franchise prospect, what kind of questions should I be asking?
1) Find out about all the fees – one time and ongoing. You want a good understanding of the fees.
2) Does this franchise require a brick and mortar location, and if so, do they assist the franchise in the site selection and construction.
3) Find out about their support and training program for both you and your staff. You are paying into a system… make sure the system helps with the education.
4) How are products procurred?
5) Find out about ongoing marketing support and related fees. Find out about how the franchise will support your particular franchise with marketing.
6) Legal issues are very important to inquire about. They are typically found in Item 3 of the FDD. There may be outstanding legal issues you need to know about.
7) Find out about territorial rights…. especially if you plan to expand.
Listen on to find out what the #1 thing is to determine whether or not you would make for a good franchisee. The answer will certainly surprise you!
Send your questions for the FranBox Mailbox.
David Stein – Franchise Investing Insider
Laurean Callander – FranVesting Producer