A Transparent Guide to Navigating the Franchise Sales Process

Aug 8, 2017


By: Kevin King, Smoothie King Chief Development Officer

Unlike traditional investments such as buying a car or a home, purchasing a business involves a multitude of steps that can take months or sometimes a few years. Whether you’re a first-time franchisee or an established owner looking to diversify your portfolio, each franchise sales experience is different and comes with its own set of hurdles. However, once you dive into it, navigating the franchise sales process is not nearly as overwhelming as it may first appear.

Much of the typical initial unease can be settled by simply guiding prospects through the process and properly setting expectations. Below, I have outlined the Smoothie King franchise sales process in the hopes of creating transparency and sharing some franchise buying tips. While this process is Smoothie King-specific, it can be applied to most other franchises and franchisee experiences.  

A Uniform 8-Step Experience for Prospects

Each new Smoothie King franchisee we sign goes through a similar franchise sales process. Our objective is to create a uniform experience that provides all candidates with the right tools and opportunities. It begins the minute they venture onto our franchise website, download the Smoothie King franchise kit and fill out our online application.

  1. A candidate fills out the request for consideration form

  2. Our Franchise Development Manager reaches out to answer any initial questions and find out if the candidate has the proper capital requirements

  3. We send the candidate our franchise disclosure document (FDD) for them to look through

  4. The candidate conducts their own due diligence

    1. The candidate contacts as many franchisees as they feel they need to in order to feel validation of the concept, location and risks

  5. We hold a Discovery Day at our headquarters in New Orleans 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

  6. We answer any and all remaining questions

  7. If a mutual decision is reached, the candidate signs the franchise agreement

  8. We welcome them to the Smoothie King family

Although the length of the evaluation process depends on the prospect’s specific timeline and the different partners involved in the buying decision, it usually takes three months on average. Because each candidate has a different comfort level regarding the amount of information they need and how aggressively they perform their due diligence, the time it takes to pursue validation varies. However, it can take as quickly as 60 days or as long as a few years in some instances – the candidate always controls the pace. We make it a point to never rush or pressure prospects into making their decision.

Common Mistakes to Avoid

1. Keeping Quiet

The biggest mistake I see candidates make is not asking enough questions. In any major purchase or investment, all lingering questions and expectations should be addressed early on. Remember there’s no such thing as a bad question. You should never feel as if it’s too late to bring something up. It is the franchise manager’s job to work with you to address any issues and give you the information needed to hit the ground running.

2. Getting Cold Feet after One Call

Another common mistake candidates make is backing out of the process after having just one conversation with a franchisee. We encourage all our candidates to connect with as many of our franchisees as they feel they need to. Calling as many franchisees as you can gives you a better understanding and feel for our system, the location where you want to open and what kind of day-to-day operations you can expect. No two owners will have the same experience, so talking to a wide array can help provide a more in-depth look at what it’s really like to own a Smoothie King. 

3. Not Following the Process

The third most common mistake is candidates try to complete the process out of order. Some wish to go to the discovery day before doing due diligence, while others want to forego certain steps altogether. The process is designed to build on each preceding step, helping provide you with the insights you need to advance. It’s important to note that the franchisor is ultimately looking to see if you’re able to follow a process. After all, this is a two-way evaluation phase, where both parties are looking to see if the other will be a good fit. If you show that you can’t follow the system during the discovery phase, how are you going to follow operating procedure when you become a franchisee?

4. Ignoring Red Flags

Finally, I’ve seen too many candidates disregard potential red flags. If you sense that something is amiss with the brand’s financial situation or the franchisor’s history, be sure to address it. Ask yourself if these are the type of people you can see yourself associating with outside of a business opportunity. If the answer is no, then you might want to find a better cultural fit. Another major red flag to look for is poor communication. If you are having a hard time reaching the franchise manager or they do not seem to be returning your calls or emails, odds are you are going to run into similar issues if you eventually join the system.   

Ask the Right Questions

Below are just some of the many important questions you should ask yourself throughout the franchise sales process:

  • Can I see myself proudly promoting this brand?
  • Am I comfortable with the initial investment?
  • Does their FDD make sense?
  • Do I like the Item 19 financial performance representation?
  • Do I see myself being able to achieve the results I want?
  • Does the leadership team have the same vison I do?

For more insights about what questions you should ask, please see my previous post about identifying a great franchise brand.

Perhaps the most important question any franchise candidate should ask themselves is: Will this franchise help me reach my personal and financial goals? Make sure the answer is a definite “yes” before you move forward. Operating a franchise is a large commitment. If you don’t truly believe in the brand that you are partnering with, it’s going to be pretty hard to come into work every day.

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