On the verge of jumping ship, saying “sayonara” to your status as employee to forge ahead as an entrepreneur? Or just ready to stretch your creative muscles for a change and reap all the fruits of your labor?
All great reasons to start your own business. The real question: Can you increase your earnings by going out on your own?
One way to get a handle on your potential earnings is to choose a franchise since you can get realistic data from the financial disclosure document, a veritable roadmap to a franchisor’s business, as well as from franchisees currently in business or out of business.
Conducting research is critical, but knowing how to conduct a good franchisee interview is key to getting a real read on the business.
Only about one-third of franchise companies disclose earnings numbers in the disclosure document, which is why you’ll need to delve deeper. You’ll need to use what all franchise companies are required to disclose: a list of every franchisee along with their contact information.
You want to talk to as many as possible, preferably those operating in areas the most similar to your location. Talk to those not operating any longer, also. But there is an art to interviewing franchisees.
As anyone knows who’s ever watched TV news, some interviews lead to surprising revelations, while others end up as duds. The trick is to get the most from these conversations your first time around. A franchise coach can help you plan your interview so you can get a true picture of a particular franchise, including earnings potential. Here are a few tricks of the trade.
Five Keys to a Revealing Interview
First and foremost, you should be courteous toward this person who is taking time from his or her busy day to help you. Ask for a specified amount of time, such as 15 to 30 minutes, and stick to it. If you have a few extra questions, politely ask if the franchisee can spare a few more minutes. And don’t forget to thank the franchisee for talking to you.
In American culture, we have a tendency to interrupt. Squelch that instinct and listen to the franchisee. You’re asking for information you don’t already have, so be careful not to put words in this person’s mouth. What you want, after all, is to hear things you don’t expect.
Even when you’re listening carefully, you still might not quite feel you fully understand a point being made in the interview. People like it when you ask for clarification because it shows you’re listening. The absolute worst result is to get an incorrect impression due to a misunderstanding.
Start with a list of questions. Since your goal is to find out the most about this franchise operation without making your source uncomfortable, start with easy questions. Ask about the franchisee’s personal journey: why choose this franchise? Has it met expectations? Has the franchisor offered sufficient support and training? Were the upfront fees easily recouped by generating sufficient revenues?
You do want to get a window into earnings, but we strongly advise against asking this question outright. Instead try: How long should it take me before I can expect to make $100,000 a year. You can ask the question several times, substituting progressively higher numbers. This way you’re not asking about the individual’s business per se, but the franchisee will give you a good idea of what you can realistically expect to earn.
- Follow up
If the franchisee mentions an aspect of the business you hadn’t planned to discuss, but it’s something he or she obviously deems important, by all means, follow up. This is how some of the most pertinent pieces of information arise that may prove critical to your eventual decision to buy this franchise or not.
Everyone knows starting a new business requires a capital investment, but it also demands intellectual capital — yours. It’s always better to know as much as you can about a business in which you’re about to invest your money and yourself, so go out there and interview people with experience.
Dan Citrenbaum is a franchise coach and consultant to entrepreneurs, who helps people achieve their dreams as small business owners. He has a proven track record helping people select and buy a franchise or existing business. Contact Dan at email@example.com or at (215) 367-5349 and view his company website at www.entrepreneuroption.com.
© Dan Citrenbaum 2014