The best source of information when you’re researching a franchise is to talk to the existing franchisees. Through this you can validate what you’re hearing from the franchisor, and by listening carefully and reading between the lines you can develop a keen sense of how everything is going in the system, not just from what franchisees are saying but also how they’re saying it.
One thing to keep in mind though: you have to ensure that you’re receiving input from a valid cross-section of the existing franchisees. Though a franchisor is required to give you a list of their franchisees so you can call whichever ones you want, it’s also fairly common for franchisors to steer you toward selected franchisees for validation calls.
This steering is not necessarily a bad thing – some people are just natural born complainers – but it definitely represents a risk to you if the franchisor is purposely and only steering you towards owners who will paint a picture rosier than the system-wide reality. These excessively positive ‘validators’ are known in sales circles as ‘song birds’, but their melody can be harmful to you if you’re not careful.
The following are five steps you can take while researching a franchise to protect yourself from song bird abuse:
1. The whole spectrum
Make sure you personally select a reasonable number of existing owners to call. Don’t settle for calling only the ones recommended by the franchise sales person. Make your decisions based on a good sampling of newer versus experienced franchisees, differing market sizes or geographical regions and business locations, and different sexes, ages, and occupational experiences of the primary operator.
2. Steer the franchisor
Don’t make it easy for the franchisor to steer you. If you’re looking for variety in the characteristics of the existing franchisees, ask the franchisor for assistance. But ask the franchisor the same questions about lots of franchisees on the list.
As an example, select 20 to 30 of the existing franchisees on the list and ask the franchisor the same questions about each one, such as their background prior to entering the business, the principle operator and how long they‘ve been operating. This will only take a few extra minutes of your time and gives you the information you need to decide who you want to call.
If you simply ask the franchisor for some examples of certain characteristics, like operators with more than five years’ experience, you’ll probably receive the three most positive folk who fit that description.
3. Listen to grumbling
Make sure you visit some franchisees who are struggling or have a beef with the franchisor. No system has all their franchisees in perfect alignment all the time, so there will undoubtedly be a few who are struggling or upset about something.
You’re looking for these people because without them you’re not getting the full spectrum of potential input available, so if you aren’t finding some facing challenges, keep calling until you do. Pay close attention when you get a grump, because you’ll need to decide if you think their complaints or issues would be relevant to you if you become a franchisee (which isn’t always the case).
4. Face value
Go beyond validation conference calls. Many franchisors, especially younger or rapidly growing systems, use scheduled conference calls to facilitate validation. This is an efficient method for giving lots of prospects access to busy franchisees, but there are a few rules of the road you need to remember.
First, the franchisor should not be a participant in these calls because that’s going to influence what the franchisees say. Second, there should be the ability to ask the franchisees questions during the call so you can expand on any prepared presentation. Third, always make sure you contact other franchisees who aren’t included in the scheduled calls to ensure that they tell the same story.
5. The pendulum effect
Take everything you hear with a pinch of salt. The purpose of these calls is to gather additional information you can use in your evaluation, but it’s also to develop a sense of the culture and attitudes of the system. It’s entirely possible that you’ll hear input that’s either more positive or negative than normal from any of the calls you make, based on something as random as the last customer interaction the franchisee had just before you called.
Don’t overreact based on a comment that may have been indicative of nothing more than which side of the bed they got up on that morning.
Trust your gut
The benefit of validation calls is that you will find your interest in the franchise quickly increasing or wilting after just a handful. Waning interest is a red flag telling you this probably isn’t the right business for you. If you find your interest rapidly increasing, it’s a very positive sign.
Even if you can’t really put your finger on why either of these reactions are happening, trust your gut. Your instincts have a way of making you feel right or wrong about a decision like this and they are usually correct.