By Evan Hackel
On first glance, you might think that potential buyers of your franchise don’t have much in common. Some are men, some are women. Some are millennials, others are at mid-career, or are even later in their careers. Some potential buyers went to college, others did not. Some were born and bred in America or Canada, but many come from other countries.
Yet although they are different in many ways, they tend to have a number of similar questions in mind when they are thinking about buying your franchise.
In my experience, here are the questions that are on their minds. They are the questions you should be prepared to answer when you are selling to new owners.
Group One: Questions Almost All Buyers Have
Question One: How much money will it really cost me to get started?
Every potential buyer wants answers to this question. They want the full picture, including the franchise fee, the costs of equipment, the cost of renting or buying a premises, projected cost of hiring new staff – everything. They will then compare those costs to the amount of up-front capital they have to invest in your franchise. They will also compare these expenses to the cost of owing other franchises. Do your best to make it clear what those costs are, and do not downplay them.
Question Two: How much money can I expect to make?
They’re looking for data on what top vs. average performers earn. So make it as clear as possible what potential income can be, explaining variables such as location of the franchise, payroll costs, selling seasons, and more. An educated buyer is most likely to make a considered decision about whether or not to buy, and least likely to be disappointed after the purchase is complete.
Question Three: What kind of training will I receive?
Buyers want to know if you will actually train them to succeed or just hand them a manual. The better your training, the more likely it is that you will sell franchises because great training sends a clear message that you are fully invested in your franchisees’ success. I would also encourage you to invite potential new owners to sit in at your training sessions before they commit to buy your franchise. Your excellent training can be among your most effective selling tools.
Question Four: Are good locations available?
Potential buyers want to know where they can locate their franchises if they decide to buy. They also want to know whether competing businesses are already established in the locations you are suggesting, or are planning to arrive. The more information and guidance you can give, the more likely it is you will sell your franchise to potential new owners.
Question Five: What rules and procedures will I be required to follow – and what will the penalties be if I fail to do so?
Potential owners want to feel some healthy freedom to run their businesses as they want, but should also be made aware of required activities and procedures they will be required to follow. If penalties are charged for non-compliance, spell out what they are. I would also suggest establishing a variance procedure for franchises to follow if they do not want to strictly adhere to one of your requirements.
Question Six: What are the ongoing fees?
Royalties, marketing fund contributions, technology fees, renewal fees, requirement to take part in your marketing programs, tell them everything. Buyers want transparency. And be sure the fee structure is spelled out carefully in your franchise owners’ manual.
Question Seven: How happy are current franchisees?
This is one of the biggest trust indicators, and one of your most powerful sales tools. Prospects want to talk to existing owners and hear the truth.
Question Eight: What kind of ongoing support can I expect from you?
Potential owners understand that they will need prompt and considerate answers to questions that arise as they run and expand their franchise operations. So make it clear. One effective way is to present videos during the sales process that illustrate how actual owners have confronted challenges and received support from you on how to solve them.
Group Two: Questions Many Buyers Have
Question Nine: Will I be part of an active and vibrant community of owners?
Not all potential owners are concerned with this question, but some are. Some simply want to own a profitable business they can operate without deep personal commitment. But many other potential buyers want to be part of a community of individuals who own your franchise. They want to attend your annual franchise conference or convention. They want to aspire to be part of your owners’ council. Again, be sure to tell potential buyers everything.
Question Ten: How can I expand into new locations?
Not all potential buyers are concerned with adding new locations, but some are. They want to know the costs of expansion, and they want specific case studies of existing franchises who have done so. Be prepared to explore this issue in depth if potential owners ask.
And Two Bonus Questions . . .
What is it like to sell a franchise after a suitable amount of time?
Yes, new owners are excited to know everything about coming on board and running your franchise successfully. Yet they would also like to know the specifics on how they can sell their franchises at some point in the future. Again, case studies of your current owners can go a long way toward painting a full and detailed view of how that will work.
Can I be an absentee owner?
Some potential owners are hoping that they can hire employees who will do most of the work of running their franchises when they are elsewhere. Others are expecting to be on the premises full-time. Do not avoid these questions, be ready to answer them.
About Evan Hackel
Evan Hackel, MBA, CFE (Certified Franchise Executive), is an author, speaker, consultant, and entrepreneur who has helped launch more than 20 businesses and led brand portfolios exceeding $5 billion in systemwide sales. He is President of the New England Franchise Association, creator of Ingaged Leadership, author of Ingaging Leadership: The Ultimate Edition, and CEO of Ingage Consulting.
To explore speaking, consulting, or franchise advisory support, visit www.evanhackel.com.