What Happens When You Enquire About A Franchise?

Meredith Taylor and Nathan Bonney outline what to expect from the moment you first contact a franchise and say, 'I'm interested in your opportunity'

If you’ve ever thought about owning your own business, buying a franchise can be a great way to start. You’ll get training, help and advice; you’ll have systems to follow; you’ll have an established name to bring in customers, systems to help you work efficiently, and a group of fellow franchisees around you to talk to and support you as you grow. You’ll also benefit from the buying power, shared information and mentoring that comes from being part of a bigger group.

So how do you actually get into a franchise in the first place? Look through this magazine and you’re sure to find something that will appeal, with franchisors inviting you to contact them and find out more. What happens next and what questions will you be asked? It’s perfectly natural to be a bit nervous when you’re making an enquiry about something that could change your life, so here’s a guide to what to expect.

Every industry sector – and even franchise systems within each sector –will approach things differently, so the approach and comments outlined below are generalised and focus on the process for dealing directly with the franchisor.

New or existing?

If you are looking at buying an existing business which is already operating under a franchise brand, there will be some additional steps in the process. You will first have contact with a business broker or in some cases may deal directly with the current owner themselves (be aware that there are restrictions on who can legally facilitate the sale of a business in New Zealand – this is covered by the Real Estate Agents Act 2008).

In this case, it is common practice that a condition of settlement in the Sale and Purchase Agreement is that you are approved as a franchisee by the franchisor. Once you have agreed on a price and terms with the vendor, this is usually when you commence the interview process with the franchisor.

Whether you are interested in a new or existing business, your contact with the franchisor is a two-way process designed to help both you and the franchisor work out whether you are suited to the business, whether the business is suited to you, and whether you and the franchisor would like to work together. Until you are both satisfied and sign an agreement, you are not committed to anything.

Getting professional financial and legal advice before you sign should be high on your list of ‘must-do’s’. Speak with your bank, financial and legal advisors early and build a relationship with them. Make sure you use franchise specialists who will have considerable expertise and background knowledge. Again, there’s a list of specialists in the Directory (see page 78)

Get prepared

Applying to be a franchisee is similar to applying for a job, in some ways – something almost all of us have done. You want to know what you’ll be doing and what sort of people you’ll be working with; the other party will want to know what skills you have and how you’ll fit in. So before you start looking, think about what you really want from a business: what hours you are prepared to work; what lifestyle you want; what you can invest; what returns you want; what skills you have; what you need to learn; and where you need support.

Knowing what you want will help you choose some good options, and also give a base from which to start asking questions. Remember, unlike a job interview, you’ll be asking the franchisors as many questions as they’ll be asking you.

When it comes to recruitment, some franchises have a well-established process, while others are more fluid in their approach. Always remember that you are not looking to buy into just a single unit stand-alone business – you are looking to buy in to a successful and well-refined franchise system. If you feel uneasy, or wonder if you can really see yourself being happy and successful in a particular franchise, be sure to take the time to have your questions answered.

Get informed

Before you first make an enquiry about any specific franchise, take time to do the following:

• Do some research. Respect the brand you are wishing to become part of by knowing something about its experience and expertise.

• Most established and proven franchise brands will have a wellpresented and informative website that tells you something about their products and services, and a separate section which will give you an introduction to being a franchisee.

• If possible, experience the brand yourself by visiting an outlet or seeing how it delivers its services. How does it make you feel? Can you see yourself in this brand? How does it fit with your current lifestyle and future life plans?

• Understand your WHY? Why does this particular franchise appeal to you? What makes it different from others in the same sector?

• Learn a little about the level of investment involved (the Directory at the back of this magazine details approximate investment levels for over 275 franchises). Know what your budget is, and how you might fund your business.

• Oh, and when you do make contact with the franchisor or business broker, be sure you are focused on the correct brand in your discussion. Many people look at two or three different franchises in the same sector, so it can be easy to get confused. Keep separate notes on each.

Get in touch

The interview process starts from the moment you make contact. Some franchises will ask you to fill out an enquiry form on their website, while others may request that you contact them by phone. Remember, first impressions count.

• How do you present in your first interaction? Be clear about who you are and what you are interested in.

• If you expect someone to call you back and have voicemail, ensure it’s an appropriate message that identifies you clearly and sounds professional. The same goes for email signatures.

• Don’t assume the franchisor will continue to call or email you if you don’t respond in a timely fashion.

• Always put your best foot forward – present as best you can every time.

The ‘what next?’ will vary, but each franchise you contact will have a process to follow. Be aware that how well you follow that process can also be part of the interview – being able to follow a system is essentially Franchising 101. If you struggle to follow a system, the franchisor may feel that franchising is not for you.

By the way, it’s worth noting that some franchises require good communication skills from franchisees, while others offer excellent opportunities for those with English as a second language – it depends on the nature of the business. This will probably be reflected on their website.

Get comfortable

Let’s assume that you are interested in a new greenfields business, that you have sent your initial enquiry, have followed the process and are now about to have an actual conversation with the franchisor’s recruitment person. What might you be asked? You can expect a whole range of questions. These may start with:

• Where are you currently located?

• What do you currently do?

• What experience do you have?

• Why have you made the enquiry?

• What interests you about this particular franchise?

• What are you looking to achieve?

• Where are you looking for an opportunity?

• Would you be prepared to move for the right opportunity?

• Are you looking to be the primary business owner, or will you have a business partner?

• What is your intended level of investment?

• How will you fund the investment?

• How actively involved are you intending to be on a day-to-day basis?

Get into detail

If this initial conversation goes well and both you and the franchisor are satisfied that you are interested in each other, then you can expect to be asked to sign a Confidentiality Agreement. A confidentiality agreement is quite normal, and is there to protect both parties: the franchisor will be sharing commercially-sensitive details about how their business operates which they would not want others to see, and you will be sharing personal and financial information with them.

The requirement to provide personal and financial information is often in the form of a formal ‘Application’. You will need to complete it in full and provide as much detail as you can to help the franchisor assess your suitability.

Once you have completed this stage, more detailed information about the particular opportunity can be shared with you. You may be required to have further conversations either one-on-one or via video calls –something that’s become much more common since Covid. If you are meeting in person, you may be required to travel to the franchisor’s office or another suitable location for confidential discussions.

Get to know each other

These next interviews and meetings are intended to help you and the franchisor to get to know each other better. They may involve other members of the franchisor team, and you may be invited to talk to existing franchisees, who will also want to know something about you. In some instances, the franchisor may want to meet with you at your home, particularly if you will be working with a partner or family member. It’s all part of building a picture of who you are as a person and how well you might fit into the franchise team.

Each meeting is an opportunity for you to ask pertinent business, operational, legal and financial questions about the franchise (see page 44). In return, you can expect the franchisor to ask questions designed to explore your level of business acumen and suitability to the business. Depending on whether you are looking at a ‘man and a van’ type franchise or something like a café where you will be employing a sizeable team of staff, you may be asked to talk through a business plan or asked about your knowledge of budgeting, marketing, people management and leadership. Expect questions such as:

• Talk me through a difficult decision you have had to make.

• What have you done in your previous career to increase sales?

• Tell me about a time when you had to reduce overheads – what did you do and how did you go about it?

• What was the overall outcome of your actions?

• Knowing what you know now, what would you have done differently?

You may also be asked some more personal questions than you would get in a job interview. These might include:

• Do you have children, or are you planning to have a family?

• Will any of your family be involved in the business?

• What do your family/partner feel about you wanting to become a franchisee?

• What do you do to relax?

• What do you like to do on holiday? Where did you last go on holiday?

• Have you ever been off work for a long period of time due to sickness or injury?

• Have you ever been bankrupt?

• Have you ever had a criminal conviction?

These types of questions are relevant in that they provide the franchisor with a better understanding of your background and what’s important to you. By answering all questions openly and honestly, and with as much detail as you are able, you are helping the franchisor to evaluate whether the business really can provide what you are looking for, and how likely you are to succeed in it. Oh, and they’ll help you form an impression of the franchise team’s style and culture, too.

If you are both happy with the answers you’ve got, then it’s time to proceed to the next stage (and if you’re not, then you can part as friends and no harm has been done).

Get serious

While the above steps are fairly common, the next steps can vary considerably between franchises. Some may require you to spend a day or more actually working in the franchise, either at a particular site, location, with particular franchisees or even with the franchisor themselves. This is a great opportunity for you, so if it’s offered, take it – it will give you a real understanding of what it’s like to work in the business, and how quickly you can pick things up.

In some systems, there may also be an interview panel, sometimes including experienced franchisees, who will also assess your ‘fit’ with the franchise’s system and culture. Again, this is a good chance to meet with people who have ‘been there, done that’ – if they think you have what it takes to succeed, you can take confidence from that.

You now get into the paperwork. In well-established systems, it is becoming the norm to be asked to pay a deposit prior to receiving a brand’s Disclosure Document, draft Franchise Agreement and other Intellectual Property (see page 40 for an explanation of these terms).

Although the practice is not common in New Zealand, some systems require you to pay a deposit (not necessarily refundable) prior to even commencing any discussion at all. Be sure that you understand the terms and conditions of the deposit payment, and make sure you consult a franchise-experienced lawyer before agreeing to this.

Once you have been issued a draft Franchise Agreement and the relevant documentation, your legal and financial advisors should review the relevant documentation and provide you with specialist advice, as well as assisting you with the finer transactional details.

Expect the franchisor to require background checks to be completed prior to giving their final approval of your application. These background checks may include Police and credit checks and confirmation of your eligibility to live and work in New Zealand.

Get started

Assuming that everything goes well, that you have taken good advice and are comfortable with the feedback, that you have arranged any necessary finance, and that you and the franchisor both want to proceed, then the legal documentation will be completed by both parties.

The Franchise Agreement will be signed and a deposit or full payment will be required. Congratulations – it’s all about to start! You’ll now be getting into all the 1,001 details that go with finding and setting up premises, vehicles and/or equipment, as well as commencing training and starting to learn all about how to run your new business.

If that sounds scary, yes, it is – but remember, your franchisor will have done this many times before, and will be there to provide full support. You won’t be expected to learn it all in a week or two – there will be ongoing mentoring and support throughout your franchise term. Listen to it – it’s what you’re paying for.

By the way, if at any point prior to signing the Franchise Agreement, you feel that this particular opportunity is not for you, be sure to let the franchise know as you may wish to pick up the conversation at a later time. It’s perfectly ok for you to change your mind; let the person whom you are talking to know that you are having second thoughts or don’t wish to proceed further. You might find that your worries are unfounded, or you might have your feelings confirmed. Keep communication open and never ‘ghost’ people – you just never know when and where your paths may cross again.

Franchising is based on establishing an ongoing relationship and working together in a collaborative and supportive manner within a prescribed system. It’s not for everyone – you’re not completely free to do as you like, but you’re not left to sink or swim on your own, either. Choose the right franchise and it can be extremely rewarding.

By establishing a positive relationship with the franchisor right from your very first contact, and by being engaged and honest all the way through the application process, you will create the basis for your own success.

About the Authors

Meredith Taylor and Nathan Bonney are founders of Iridium Partners, who specialise in matching franchise brands and people. Meredith has a background in human resources and general management across a range of hospitality and business sectors; Nathan has over two decades of experience in franchising including operations, sales and marketing, and general management. They work with some of New Zealand’s leading franchise brands to help people wanting to take their first step into business ownership.