Talking with Current Franchise Owners
Reading through a FDD is a key part of your research, but it can’t answer all the potential questions you might have about how it is to actually operate a given franchise. The best way to do this is actually to start talking to current franchisees. The best way is to this is to call or visit a franchisee, don’t just email them. You might need to be a bit persistent, but if you are then you can get all of your questions and concerns answered.
To find out where how to contact franchisees you should go into the exhibit section of the FDD, where most franchisors include a list of current franchisees, their complete name and contact info. If this information isn’t included then you should ask the franchisor how you can contact current franchisees. In addition, most franchisors list franchisees “who have been terminated, canceled, not renewed or have voluntarily or involuntarily ceased to operate the business during the current year.”
It's difficult to give an absolute number of franchisees who should be called. The size of the system has a lot to do with it. If there are only five franchisees, you should call all five. But in the larger systems, you'll have to use your judgment. Try to get a good cross-section of franchisees, and don't forget to call several of the franchisees who voluntarily or involuntarily left the system.
What will you talk to them about? You will ask them about all the things that are important to you. Glenn and Connie Schenenga, Future Kids (computer training) franchisees, spoke to many of the 40 or 50 franchisees listed and asked them questions like, "Are you making any money? Are you happy? What are the positives and negatives of the business?" Pretty basic questions, but ones that every prospective franchisee would like to know the answers to. You might also inquire about the hours involved in running the business, the relationship of franchisee and franchisor and, of course, when the franchisees turned their first profit.
If you contact a wide cross-section, you will undoubtedly encounter struggling, surviving, successful and super-successful franchisees. Try to determine, as best you can, why some are not succeeding. Is the franchisee taking advantage of the corporate support? Is the franchisee putting in the time? Perhaps the owner is an absentee one. Is the franchisee out selling? The point is to try and find out if the problems lie with the franchisee or with the franchise system.
The KFC Ad You Can See from Space
Yes, according to a report on space-visible ads by NPR's Mito Habe-Evans, the Kentucky Fried Chicken gang has paid the ultimate tribute to their late leader, with a tile portrait of Colonel Sanders, out in the middle of a dry expanse of dirt in Nevada, that's visible from beyond our atmosphere.
Why Doesn't Chipotle Franchise?
I’m a huge Chipotle fan and I’m not ashamed to admit it. I love a big fat carnitas burrito with every possible topping (is that even the right word for what you put on a burrito?) on it, especially guac. But every time I’m outside of New York I wonder why there aren’t more Chipotles out there. Sure there are a bunch (at the end of 2014 there were more than 1,700) but their numbers pale in comparison to other “fast food” giants like McDonald’s or Subway (they have more than 36,000 and 43,500 restaurants respectively). So why hasn’t Chipotle followed suit and gone the obviously successful franchising route?
Quiznos Franchise Narrowly Avoids Bankruptcy
With a second lease on life and control of the franchisor squarely in the hands of private equity professionals, will Quiznos be able to navigate a still-shaky economy, challenge Subway for supremacy, and win back the trust of its surviving franchisees?