Why are so many franchise discovery visits a wasted effort? It is typical that a franchisor will propose that an applicant franchisee visit the operations of the franchise system to become better acquainted with what the franchise represents.
The plan is to impress the applicant with the well-developed business model, management team and a select group of existing franchisees working hard within the franchise system. In turn a franchisor will be able to assess whether the applicant is the right fit and shows a level of diligence and enthusiasm for the brand.
In advance of the discovery visit it is assumed that the franchisee has signed a nondisclosure agreement, disclosed financial and business capacity and has undertaken sensible preliminary due diligence enquiries. The applicant is expected to meet their own costs in attending the discovery visit and in turn the franchisor and its management team make their own cost of setting up and providing the discovery visit.
All too often insufficient time is spent making sure that the strategic purpose of the discovery visit is identified and that both parties have done their homework so that the day can answer the key question: are both parties a good fit and ready for a long term business relationship that fits with the standards and culture that the franchise system and other franchisees expects from the applicant?
Common mistakes of ‘show and tell’ discovery days
Most discovery visits start off with a detailed PowerPoint presentation of the activities, history and future plans of the franchise. Why? This one-sided presentation could have been reviewed and discussed by videoconference in advance of the visit. Properly following the PowerPoint presentation, franchise management keenly whisk the applicant off to see the manufacturing plant/food commissary which produces key components for the franchise or takes the applicant to one or more premises/restaurants to walk through a particular location. These may be of some assistance particularly if the applicant is an engineer but otherwise a brisk walk through is often more for the purpose of seeking to casually ask misguided questions of the applicant as they glanced at tables, conveyor belts, food menus and smiling but somewhat disinterested staff members.
By now half a day has passed and neither party are yet to start to analyse information which could determine whether they are a good fit.
At this point, the franchisor seeks out other activities to impress the applicant such as introducing them to their marketing team and software development team. Most of the marketing would be self-evident from the website and other materials which could have been sent to the applicant in advance. The conversation with the head of the software research and development team will be a blur as the impressive geek rattles off a wide range of technical issues rather than identifying the practical outcomes which are beneficial for both the franchise system and the business operations of franchisees together with smooth transactional involvement with suppliers and customers.
The race to load countless items of information onto the applicant is often very impressive and well-organised. But it can be an information overload, distracting the applicant from gaining confidence that the franchise management team can be trusted and will be willing to step in and help if needed and who also have the common sense to be tough in appropriate situations either with franchisees, suppliers or customers.
The day’s initial agenda ends up taking longer than expected due to the fact that the huge amount of information triggers a lot of unplanned questions and answers. Eventually, the day ends with the applicant needing to rush off to catch a plane or an important member of the franchise team having to get to a special event.
Consequently at the end of the day there is little or no time for records to be prepared and an assessment made of the applicant and a chance to discuss feedback. And 12 months later there is no reassessment of whether the applicant who is now a franchisee should have been given such a positive recommendation.
The only thing that is learned is that virtually every applicant appears to be okay and if both parties are keen, a tick is given to proceed further usually leading to the applicant signing up and joined the franchise. Neither party knows much more about the other than was already known in advance of the discovery day.
13 ways to get the most from your day
1. Change from ‘show and tell’ to ‘prepare, listen and discuss’ as the format of the day
2. In advance of the discovery day, the applicant should receive the necessary information so that there is no need for further presentations
3. The applicant should have completed a key set of questions and be alerted to the day’s agenda which includes being ready to talk through those responses
4. The potential franchisee will be encouraged to ask questions of both the franchisor, senior management and some franchisees
5. Consider a refundable deposit payable by the applicant
6. Decide whether the format should be better with a single applicant or with multiple applicants
7. Rethink who are the people that should be in attendance during the day as they should include:
- a person with authority to answer questions (not necessarily the franchisor)
- a person interested in the cultural fit of the applicant
- a person with a proven track record for making good recruitment choices
- people who are not driven by a sales bonus
8. the applicant should be sent a list of questions that have been asked by previous applicants together with a pro forma of some of the answers that were given. These would be different from the ones displayed on the ‘frequently asked questions’ section of the website. Depending on what type of franchise system you are operating, the questions supplied to invitee could be:
- what has the franchisor done over the last two years to provide best value for completing the fit out for franchisee premises?
- what are the essential skills that the franchisor expects a franchisee to have from day one?
- look at the last 10 franchises that have been granted. How many are still operating within the franchise system? How many have sold their business? How many have acquired an additional franchise unit within the franchise system? How many have recommended a friend or acquaintance to be an applicant to join the franchise system?
- out of the total number of franchisees, how many attended the last annual conference?
- in the last 12 months, how many suggestions have been received from franchisees to improve the franchise system and how many have been implemented?
- if a dispute comes in from a customer or a franchisee, what happens next?
- every franchisor says that they have a unique culture which makes their franchise system better than the competitors, how is that true of this franchise and would that be confirmed by the franchisees?
- what can you say to demonstrate that there is a good level of cooperation between franchisees within the franchise system?
9. Leave sufficient time at the end of the day to allow all parties to have an open discussion to provide frank feedback
10. Have a clearly defined strategy to explain in a polite and positive sense when the applicant is not suitable and will not be invited to become a franchisee on this occasion
11. On the assumption that the applicant has met expectations, continue on with an informal social activity to ensure that a non-business environment assessment can also occur as often more can be learned during such an event than during the formal structured discovery day
12. Send the applicant feedback after the visit and also request that the applicant complete a survey so that considered answers can be provided to enable improvements
13. Occasionally include at the annual conference a debate on what would be ways to improve a discovery day with a range of franchisees of different experience participating
Measure and evaluate
It is very expensive to conduct a discovery day so each day should be assessed and the performance of every successful applicant measured against the discovery day review scores at intervals during the franchise term. In addition those who participated in the discovery visit from the franchisor team need to be evaluated to identify whether they met their own responsibilities and provided perceptive recommendations which could be validated by the subsequent performance of the new franchisee.
As a consequence of this process new minimum performance expectations can be integrated into the discovery day process and the preliminary activities leading up to that day.
What makes a great discovery day?
- make sure that both the franchisor team and the applicant have already exchanged information and prequalified before the visit
- have a clear understanding what the objective of the discovery day is to be
- make sure that the franchisee is ready to ask probing questions
- do not bombard the applicant with facts and figures
- make sure that both parties are a good fit or finish up in a positive manner
- continually assess improvements in collecting in the right information so that the best applicants join the franchise system
- always allow enough time to complete the discovery visit