Considering a business coaching franchise?
Don’t sign your name on the dotted line until you talk with existing franchisees.
And I don’t mean the franchisees your sales rep sends you. After all, in the franchising community, everyone knows that your due diligence process will make or break the sale. So they work very, very hard to keep it tightly controlled. Most franchisors will allow you to speak only with the best performing franchisees–and in some cases those franchisees are carefully coached to spin their story in the most favorable light possible.
It makes sense. When you’re asked for a reference, do you give out the name of someone who likes you and will sing your praises? Or do you refer someone who has a low opinion of you and would bad-mouth you to your perspective client or employer? Of course the answer is obvious! It’s no different with a business coaching franchise brand.
The opportunity to meet with this carefully selected group of franchisees often happens in the context of group conference calls, panel calls, question and answer calls, and the like. You’re told that these group sessions are conducted out of respect for and to leverage the time of existing franchisees. That’s only partially true. The more important reason for doing these calls in groups is so the franchisor can more effectively control the process. If all goes well, the franchisor hopes you won’t feel the need to call individual franchisees and get the straight scoop “off the record.”
So what’s your best move?
Make Off-the-Record Due Diligence Calls
Here’s what you do: open the Franchise Disclosure Document, pick up the phone, and start calling everyone on the list.
When you get someone on the phone, make your call short and to the point. Tell them you’re considering a business coaching franchise and you’re hoping for some feedback from existing franchisees. Don’t waste their time with your story; just ask them if they have a few moments to share with you their story.
Here are a few questions you can ask:
- How many months have you been in business?
- What additional required expenses have been added since you originally signed on?
- What’s your monthly break-even point in sales?
- How much revenue did you bank in the first 12 months?
- How much revenue did you bank in the second 12 months?
- How much revenue have you banked as a result of the franchise brand’s recognition?
- What kind of support do you get from the franchisor?
- How frequently do you have coaching sessions with your regional manager?
- Who are your most significant business coaching franchise competitors?
There are several more questions you can ask; find a comprehensive list in our FREE due diligence guide, The Business Coaching Franchise Buyer’s Guide.
After interviewing at least 10 to 15 franchisees, you should be able to piece together a very good picture of how much money the franchisees are making, how knowledgeable the regional managers are, how competent the franchisor is, and how well the model actually works. With answers to these questions, you’ll either be ready to quit the process or continue on with increased confidence in the brand.
After interviewing at least 10 to 15 franchisees, you should be able to piece together a very good picture of how much money the franchisees are making, how knowledgeable the regional managers are, how competent the franchisor is, and how well the model actually works.
Either way, if you’re considering a business coaching franchise, you’ll be glad you took the time to make these phone calls–as they could be the difference-maker to the tune of hundreds of thousands of dollars!