When you're looking at service franchises, (or for that matter, any franchise business category) it's important you to gauge how the existing franchise owners (franchisees) are feeling about their businesses. Franchisee satisfaction is really an important part of your franchise research.
It's not really realistic to think that 100% of the franchisees that you contact will have their cheer-leading pom-pom's activated.
What percentage of franchisees should you expect to be satisfied with how things are going?
I'd go with the good, old, 80-20 rule. 80% of the folks that you contact should be pretty darn happy with their experiences as franchise owners of the concept that you're thinking of investing in, so that you can become you're own boss.
Over at franchise-chat.com, New Zealand franchise expert, Dr. Callum Floyd, wrote that the level of satisfaction experienced by franchisees consists are linked to these things;
- Existing franchisees recommending the franchise opportunity to others.
- Franchisees purchasing the franchise again given what they now know.
- Franchisee performance
- Franchisee commitment to the organization
- Franchise relationship quality
- Franchisee tenure, or their intention to remain in the business
- Franchisees attributing their outlets success to their franchisor, rather than their own efforts
- Opposition to government legislation aimed at regulating franchising
The last one, I don't agree with. When you're doing your research, it really shouldn't matter to you whether or not the franchisee's that you're talking with are for or against franchise regulations. (Maybe it's a bone of contention in New Zealand.)
Floyd also said that, "It is important to know and understand that franchisee satisfaction is, like customer satisfaction, often described as a little bit of an abstract concept. This is really for two reasons. First, this is because satisfaction has many facets. And second, the satisfaction levels indicated by a franchisee will be unique to that individual’s franchisee’s view on the world. Yet like customer satisfaction, franchisee satisfaction is important, and can tell you a lot about the quality and health of the franchise opportunity you are considering."
For example, what if the franchisee you called is having a bad week; his top employee has mono, and just announced that she'll be out for 3 weeks. Then there's the heating and air conditioning issue. (The unit is broken!) That will cost the franchisee about $8500.
So, the franchisee's world view may be a bit skewed, the day that you call him. (Or her) Just make sure that you understand where they're coming from. Who knows, if you call them again in a couple of weeks, you may get an entirely different story.
One really important thing for you to find out during your calls and/or visits to franchisees of the concept that you're interested in is this;
Are they getting the support needed and promised by the franchisor to help them reach their goals?
In other words, does the franchisor walk the walk? Or, (and this does happen) is the franchisor really, really good at selling new franchises, but lousy at servicing the franchisees once they're in business?
If you call enough franchisees, you'll be able to get some answers as to their satisfaction.
It's an important thing to focus on, before you write a check to the franchise company.
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