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A Transparent Guide to Navigating the Franchise Sales Process

September 4, 2018

Unlike traditional investments, such as buying a car or a house, the purchase of a company involves a multitude of steps that can take months or sometimes several years. Whether you are a first franchisee or an established owner who wants to diversify your portfolio, every franchise sales experience is different and has its own set of obstacles. However, once you dive, navigating through the franchise sales process is not nearly as overwhelming as it seems for the first time.

 

Much of the typical initial discomfort can be solved by simply guiding prospects through the process and setting expectations well. Below I have outlined the franchise sales process of Contender eSports in the hope of creating transparency and sharing some tips for buying franchises. Although this process is Contender eSports-specific, it can be applied to most other franchises and experiences of franchisees.

A Uniform Eight-Step Experience for Prospects

Every new franchisee from Contender eSports that we sign goes through a similar franchise sales process. Our goal is to create a uniform experience that offers all candidates the right tools and opportunities. It starts when they enter our franchise website, download the franchise kit from Contender eSports and complete our online application.

Common Mistakes to Avoid

1. Being Quiet

The biggest mistake I see is that I do not ask enough questions. With every major purchase or investment, all lingering questions and expectations must be tackled early. Do not forget that there is no such thing as a bad question. You should never feel that it is too late to come up with something. It is the job of the franchise director to work with you to address any problems and provide you with the information you need to get started.

2. Getting Cold Feet after a Single Call

Another common mistake that candidates make is leaving the process after only one conversation with a franchisor. We encourage all our candidates to make as much contact as possible during the sales process contact with as many of our franchisees as they deem necessary. By following up on specific questions that you have, you will gain a better understanding of and feeling for our system, the location you want to open and what kind of daily activities you can expect.

3. Not Committing to the Process

The third most common mistake is that candidates try to not follow the proper steps to complete the process. Some want to go to the discovery day before they exercise due care, while others want to leave certain steps altogether. The process is designed to build on every previous step, giving you the insights you need to continue. It is important to note that the franchisor is ultimately looking to see if you can follow a process. After all, it is a twofold evaluation phase, in which both parties see if the other person fits well. If you show that you can not follow the system during the discovery phase, how will you follow the procedure if you become a franchisee?

4. Ignoring Red Flags

Finally, we have seen too many candidates who ignore possible red flags. If you believe that there is something wrong with the financial situation of the brand or the history of the franchisor, you must mention this address. Ask yourself if this is the type of people with whom you can associate yourself outside of a business opportunity. If the answer is no, you may want to find a better cultural fit. Another big red flag is poor communication. If you find it difficult to reach the franchise manager or if they do not seem to send you calls or e-mails, chances are you will encounter similar problems when you permanently join the system.

  1. A candidate fills out the request for consideration form
  2. Our Franchise Development Director reaches out to answer any initial questions and find out if the candidate has the proper capital requirements
  3. We send the candidate our example Franchise Agreement for them to look through
  4. The candidate conducts their own due diligence
  5. The candidate contacts as many franchisees as they feel they need to in order to feel validation of the concept, location and risks
  6. We hold a Discovery Day at one of our headquarters in Phoenix, AZ where our executive team goes over every facet of franchise ownership including:
    1. Real estate
    2. Construction
    3. Marketing
    4. Operations
    5. Supply chain
    6. Training and orientation
  7. We answer any and all remaining questions
  8. If a mutual decision is reached, the candidate signs the franchise agreement
  9. We welcome them to the Contender eSports family

Although the duration of the evaluation process depends on the specific timeline of the prospect and the various partners involved in the purchasing decision, it takes on average two months. Because each candidate has a different level of comfort in terms of the amount of information they need and how aggressively they perform their due diligence, the time required to pursue the validation varies. However, it may take 60 days or in some cases a few years, the candidate always determines the pace. We make a point of never rushing or putting the prospects under pressure to make a decision.

Ask the Right Questions

Below are just a few of the many important questions you need to ask during the franchise sales process:

 

  • Can I see myself proudly supporting and promoting this brand?
  • Am I comfortable with the initial financial investment?
  • Does their Franchise Agreement make sense?
  • Do I see myself being able to achieve the results I want?
  • Does the leadership team have the same vison I do?

Perhaps the most important question a franchise candidate must ask himself is: Will this franchise help me to achieve my personal and financial goals? Make sure that the answer is clear before you continue. Operating a franchise is a big commitment. If you do not really believe in the brand you work with, it is difficult to go to work every day.

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