Identify the perfect franchise for you! Take our short quiz Take our free franchise quiz!
Identify the perfect franchise for you! Take our short quiz Take our free franchise quiz!

Meeting the Franchisor - Maximize Your Benefits From Discovery Day

A crucial step in the process of purchasing a franchise is meeting with the franchisor at corporate headquarters. It’s an important time for the franchisor and prospective franchisee.

Whether it is a “Discovery Day” or other term that the franchisor uses, most franchisors require prospective franchisees to visit their corporate headquarters as a pre-requisite to buying a franchise.

Although, some franchisors try to schedule the corporate visit at an early stage in the franchising process, the franchise candidate should attend Discovery Day after:

  • Speaking to several franchisees
  • Having reviewed the Franchise Disclosure Document (FDD)
  • They have gained a good understanding of the franchise program.

A word of advice: some franchisors will not provide a copy of the FDD to a prospective franchisee until the candidate visits the Franchisor’s headquarters. I believe that once a franchisee completes and submits the application to the Franchisor and is approved, the Franchisor should be willing to forward the candidate a copy of the FDD.

Each party should have objectives they wish to achieve as a result of Discovery Day:

Franchisor Objectives:

  • Meet the franchisee candidate face to face.
  • Review the qualifications and make a collective decision regarding the candidate as a future franchisee.
  • Present the franchisor program and key staff to the candidate.
  • Resolve any open items or questions on the part of the candidate.
  • “Close” the franchise transaction.

Franchisee Objectives:

  • To observe, recognize and understand the franchisor’s corporate culture.
  • To obtain answers to any remaining questions.
  • To ask questions raised from franchisee interviews.
  • To negotiate any open items pertaining to the franchise agreement.
  • To gain feedback from franchisor staff regarding the individual franchisee's business plan and strategy.

Typically, the franchisor will have a set agenda or format that is used for Discovery Day visits. Be sure to request a copy of the agenda before your meeting. It should include a list of those individuals who you’ll be dealing with as a franchisee.

From a functional standpoint you want to meet those people:

  • Who furnish training and support services to the franchisees.
  • Who are responsible for marketing and sales promotional activities.
  • The franchisor senior management or founder.

This visit is very important, since it usually comes near the end of the franchising process. It may be the last chance you’ll have to obtain answers to important questions before you decide to sign the franchise agreement and pay the fee. Based upon the results of your interviewing franchisees and the review of the FDD, you should have specific questions for the franchisor staff. From the franchisor’s perspective, recognize that the franchisor staff is going to make a decision as to whether they feel you are qualified to be a franchisee.

Hopefully, you have been able to have a positive visit with the franchisor and have resolved the questionable items, with the result that you will sign what you and your attorney feel is an equitable franchise agreement. It is important that you utilize legal counsel to advise you in this final step because once you sign the franchise agreement you put your name and money “on the line.” Do you feel, based upon all of the information you’ve gathered, that they will “deliver as promised?” This is the question you should be able to answer at the end of Discovery Day.

About the Author: Ed Teixeira has over 35 years of franchise industry experience as a franchise executive and franchisee. He has served as a franchise executive in the c-store, manufacturing and home healthcare industries and has licensed franchises in Asia, Europe and South America. He has spoken on the subject of franchising throughout the world. Ed operates FranchiseKnowHow which provides information and advice to prospective and existing franchisees and franchisors.

Before Buying a Franchise Identify Your TRUE Investment

Your approach as a potential franchise buyer is to identify the real investment dollars you’ll need to get the franchise to profitability. The initial source of this information is Item 7 in the FDD. Item 7 is a schedule that details the estimated investment in the franchise. This schedule includes the cost of various items, including: the initial franchise fee, training related expenses, rent, insurance, professional fees for legal and accounting services, supplies, equipment, licenses and permits and additional working capital. Depending upon the specific franchise, there may be added categories. When reviewing the Item 7 schedule it’s important to know that franchisors are not required to list every type of fee or expense that might be part of the investment in the franchise but rather the likely investment needed to start the franchise. As you work to establish your investment number keep in mind the words “estimated” and “typical.” Item 7 is a guide, and as such, you should use this information accordingly.

Protect Your Brand: Trademark Monitoring for Franchisors

Almost all franchisors own at least one federally registered trademark (and if they don’t, they should). As a general principle, brand owners are required to monitor and enforce their trademark rights in order to retain the exclusivity afforded by federal trademark registrations. This takes on additional complexities for franchisors—who need to make sure not only that no one is using their trademarks without authorization, but also that franchisees are making proper use of their marks.

The Best Home-Based Franchise Opportunities in the USA

Other major advantages of home-based franchise opportunities are low start-up costs and overhead expenses.The initial investment required for an at-home franchise is typically much lower than a conventional franchise, often in the $15,000-$30,000 range. Some home-based businesses can be started with just $10,000. Since franchisees do not need commercial space, work-from-home franchises also have low overhead costs and require little to no inventory.