Franchisees Should Maximize the Benefits of their Discovery Day
by Ed Teixeira
When attending a Discovery Day for a franchise opportunity it’s
important to recognize this event as a critical step in the franchising
process. This article provides an outline of the steps a franchise candidate
should follow when attending Discovery Day in order to maximize the benefits
of this meeting.
An important step in the process of purchasing a franchise is the meeting
between the franchise candidate and the franchisor at their corporate
headquarters. Known as Discovery Day, almost every franchisor requires
prospective franchisees to visit their corporate headquarters as a
requirement for purchasing a franchise.
Some franchisors try to schedule the corporate visit at an early stage in
the franchising process. However, as a prospective franchisee, patience
should be exercised. The primary objective of the franchisor is to qualify a
candidate and sell the franchise.
The meeting should take place after you’ve spoken to franchisees,
reviewed the Franchise Disclosure Document (“FDD”) and have gained a
thorough understanding of the franchise program. During the meeting the
franchisors’ staff has the opportunity to meet the franchise candidate,
review their qualifications and make an informed decision regarding the
franchise candidate becoming a franchisee.
A franchise candidate should have some key objectives they wish to
achieve as a result of this meeting:
Franchisee Objectives:
- To observe, recognize and understand the franchisor’s corporate culture.
- Determine that their personality and objectives are compatible with those
of the franchisor.
- To obtain answers to any remaining questions.
- Raise important questions learned from franchisee interviews
- Negotiate any open items pertaining to the franchise agreement.
- Gain feedback from franchisor staff regarding your business plan and
strategy.
The Franchisor should have an agenda 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 future franchisee. If
there is no agenda, this could be a negative sign regarding the lack of
preparation on the part of the franchisor.
You should have an opportunity to meet franchisor staff:
- Who furnish training and support services to the franchisees
- Are responsible for marketing and sales promotional activities
- Including the franchisor senior management or founder
Remember, this visit is very important to you, 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.
You should ask questions specific to the franchise opportunity. Based
upon the result of your interviewing franchisees, the review of the
franchise agreement and FDD as well as other sources, you’ll be able to have
specific questions unique to this particular franchisor and its
organization.
Take full advantage of this meeting with the Franchisor to gain a level
of trust and confidence.
Do you feel, based upon all of the information you’ve gathered, that they
will “deliver as promised”?
In addition to the questions you ask, this is your opportunity to have a
discussion regarding the items in the franchise agreement that you would
like to change or amend. Your attorney may very well recommend the process
you should follow whether you negotiate during your visit or whether your
attorney negotiates on your behalf.
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 items that you wanted to; with the result
that you will sign what you and your attorney feels 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 “on the line.”
It’s a good idea to bring a business plan and cash flow projection to the
meeting.
Contact the franchisor in advance for the information that you will need
for a cash flow to include margins, operating expenses and staffing levels.
You can use that information in combination with what you feel your sales
projection will be and the profits on those sales.
Be sure to capitalize on your meeting with the franchisor so that the
decision you make is the right one. “It’s easier for a franchisor to recover
from a bad decision than a franchisee.”
© 2010 FranchiseKnowHow, LLC
Ed Teixeira is the President of FranchiseKnowHow, LLC.
He can be reached at
franchiseknowhow@gmail.com |
