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Franchise Discovery Day: What to Expect

Franchisee Discovery Day: What to Expect


Amanda: All right. So, we have talked to a lot of people in this process, including existing franchisees. And up to this point, you know, the folks at the corporate team or the home office or whatever that particular industry or company calls it, I’ve really talked to my franchise development person, my contact, my go-to for this whole thing, may have talked to one or two other people kind of in that process. I know some companies have an opportunity to talk to some of the senior leadership, CEO, COO at that point. But I really haven’t gotten a good feel for the people who are going to be supporting me in this process. And, you know, it’s important, you know, buying…it’s a marriage. We talk about this as a marriage. I wonder who I’m marrying, essentially, for this whole process, and we talk about discovery days. So I know it’s different places, you know, in the process depending on what company you’re working with or talking to, but the concept is the same thing and it’s an opportunity to meet those people. So, Mike, talk to us, you know, just kind of set the stage for what is discovery day, the importance of it.

Mike: Yeah. So “discovery day” or other companies may use the term “meet the team day,” those are probably the two most common terms in franchising is either you have a discovery day or you have a meet the team day, they’re both the same thing. It’s about discovery and it’s about meeting the team. And it’s, at least from my perspective, the best part of the process that should be the last part of the process because I don’t necessarily believe that people should go to a discovery day before they’ve had a chance to validate. Because discovery day is a full day and sometimes it’s two days and maybe even longer in some cases. In our case, it’s a day-and-a-half, maybe closer to two days now. But, and I think that when you get to that point, you shouldn’t have done that until you’ve talked to franchise owners and said, “Yeah, I’ve done enough validation where I feel really good about what I’ve heard, but I still want to go meet those folks and make sure that they are what I believe they are.”

Because I may have talked…to your point, I mean, I’ve obviously been working with the development individual through that time and in that process I, you know, garner a pretty strong relationship with that individual. So, if I’m a potential candidate looking to buy a franchise, now the development manager has a lot…I have a lot of faith and trust in that individual now and I’m counting on them for their guidance and their wisdom and their direction. And it doesn’t matter how strong the candidate is, they will tend to latch onto the development manager and make sure that they’re getting the right information and following the right steps.

Amanda: No, I mean naturally so, right?

Mike: Naturally so because that’s…but in that process though, they may have talked to, you know, a field operations support person, they may have talked to a marketing individual or technology individual in that process before they’ve ever come to discovery day to ask questions if they have questions directly from the person in the company, in the corporate side of the company that would be able to handle them or direct them. So, but it’s different on the phone than it is in person. So discovery days, in our process, are at the end because that’s the culmination of all of your research and time and energy to get to a point now where the only thing that’s standing between you and a franchise is the team. And so discovery days come in for that purpose.

And, you know, they’re handled a lot of different ways. Some companies take you on tours of franchise operations that might be local to the market. Some will take you tours on warehouses if they have that concept in their model, you know, where the ice cream is made or, you know, where the pretzel is made. I mean, there’s many different ways and forms that discovery days play out. But in the end, it’s about the team. So, as a candidate, I have a vision of what I believe this company is now. I have a vision of what their culture is based on what I’ve heard from either franchisees or the corporate team that I spoke to, and I now want to validate that. So, I come in and I have a chance now to meet…

Amanda: So this is always in person?

Mike: This is always in person. There are…I’m going to try to see if I get this number right. There are seven core departments to any franchise development company. You’ve got legal, you’ve got finance…you’ve got legal, finance, compliance, training, operations, technology, marketing, I’ll add an eighth, sales. So, there’s that component. And when I go to discovery day, I want to meet those folks. I want to meet the leader of those departments to be able to understand what their vision is and strategy is for that area of the business. I want to meet their team because those are the people I’ll be interacting with, and I want to go department by department, and I want to get a good feel from the eye test and the visual perspective that these are people that not only have I heard are good people culturally, but are also knowledgeable and that I can rely on if I need to.

If I’m not an expert in an area of the business, say I’m not an operations person, I want to make sure in that discovery day that I meet the VP or whoever’s heading operations and the team so that I know that they can help me in an area of the business model that I don’t have strength in. That’s really, ultimately, what a discovery day is about. It’s a benefit if you can go to a franchise operation or if they have a company-owned operation to see and feel and interact with the people that are running the business.

In our case, in discovery days, we have, I’ll say, half to three-quarters of the first day dedicated to being in our company, an office that works in the same building as our home office does. And so, we get to take them over to that side and they get to interact with the team. They get to see the operation, how things are done. They get to touch and feel and smell the business. And that’s the first part of our discovery day. And the next day after an enjoyable dinner together where we get to see how they interact on a personal level, where it’s not about business, where we can see what they’re like outside of business, which is why you have a dinner or some event like that before they come back the next day and meet the team and all the various departments that support them in their franchise.

Amanda: Absolutely. So a lot of just putting faces with names and programs and making sure that you’ve got the right people supporting you. You know, we’re coming off an episode on validation where you’re talking to existing franchisees and we mentioned in that episode about the different programs that are offered. So this is an opportunity to meet the folks who are creating those programs, who are driving those programs, who are responsible for future programs and really pick their brains about that. So presentation conversation, what should I expect out of this day or two days or however long it is? You know, should I expect to just come and learn about things or is this an opportunity for me to ask questions and interact with them? You know, is it more conversational? What are we talking here?

Mike: It’s both. It’s pretty wide open. I think it may start with presentations from each of the department heads so that they can help you understand what is it they do, what that department’s responsible for, what they’re working on, but share their vision or strategy and maybe their tactical plan of how they support franchises. And then it’s open to a Q&A. Once you understand that and you’ve done your validation, you should have a list of questions that you heard, that prompted those questions in validation, or even during your discovery process, through your conversations on the phone with people in certain departments or your development manager. There’s always going to be a list of questions to get sparked the more people talk and the more people share. And that’s your opportunity to come to the home office and not only just meet the folks and understand what their strategy, vision, and tactics are for their business line, but also to ask the questions that you have around that business line.

“I want to understand more about your field operations program.” That’s the chance to be able to dig into it and get more understanding of how it executes, how often it executes, what is the process as it’s executing, how do I get on the list for that, you know, field visit, program, etc., etc. If that’s what my interest is, then I’m going to ask a lot of questions. It’s a lot of give and take. The other thing about discovery day is it gives the potential candidate a chance to see what’s real and what isn’t. Meaning, if you hear it’s a good culture, as you’re going department by department, you can see whether or not people are consistent in the way they approach the business, in the way they think about franchise owners, the way they think about this business. There is a lot of consistency or lack thereof throughout the day when you’re spending a day or two in a franchise company interacting with different individuals and leaders in that company and staff in that company to know whether or not the culture is what they say it is.

Amanda: Absolutely. That’s not something you can pick up on the phone…

Mike: Can’t pick that up…

Amanda: …by any stretch of the imagination.

Mike: Correct. And then the other component is not just culture, but it’s, excuse me, the consistency in messaging. You know, often when you’re in a discovery day, candidates will ask the same question to 10 different people, maybe 12 different people to see if there’s consistency in the answers. And in that, you can tell whether or not the company walks what it talks. And so, there’s a whole give and take. What I would tell you is most discovery days, although the candidates come in and they are there to validate whether or not the company is who they are and whether they want to sign an agreement and pay their franchise fee, and so they come in with that mindset.

But I can tell you that it’s as much of a mindset on the franchisor side, if they’re a responsible company, to really make decisions about whether they want that individual in their system. Will that person represent their culture? Will that person go out and be the business builder? Will that person, you know, create their success? Or will they be talking about exit strategy in two years or three years? And so there’s a duality to the discovery day process. It’s for the potential candidate to decide whether the company’s a good fit for them as much as it is for the company to decide whether the potential candidate is a good fit for them. And then typically afterwards, both sides, you know, leave each other and the candidates go back to decide whether or not they want to buy the business and the home office team huddles to talk about what they thought about the candidate. And they collaboratively will vote on whether or not that candidate is the right fit. And if so, they would award. And at that point, the candidate would have the option of accepting that award or not.

Amanda: So when we talk about the franchise disclosure document review period, and there’s that mandatory 14-day waiting period before you can decide whether or not you want to move forward, is that consistent in the discovery day? You said, you know, everybody kind of goes their separate ways and thinks about it and figures out if this is the right thing to do to move forward or, you know, if I’m ready at the end of that and I’m like, “I love everybody that I talk to and the direction of the company and culture and everything that’s important to me is here.” You know, what’s…?

Mike: So, a couple of things. Number one, the 14 -day period that the FTC requires has likely long expired by the time you get to discovery day unless somebody is trying to fast track their way through.

Amanda: But as a concept, is that a mandatory waiting period?

Mike: Yeah. So, the answer to that question is very philosophical. I’ve seen companies that use discovery day or meet the team day as a closing event, which means they’ve got contracts ready. They take the candidate through a process, they tell the candidate it’s a closing process and that they would hope they’re able to make a decision. So come prepared if you are to execute. And that’s a philosophical choice that that company’s made. Other companies don’t ever close at discovery day, and they let the candidates know that it’s not a closing event. That puts the candidate somewhat at ease so they don’t have to worry about coming in and signing contracts when they’ve been told that won’t happen. And that, in my opinion, makes for a more relaxed discovery day event because the candidate is not worried about being pressured to buy. That’s philosophical.

And I’ve seen extremes…those are the two extremes. And there’s, you know, opportunities in between. If the candidate at the end of the day feels they were ready to move forward, and the team can meet and collaboratively vote on whether or not they feel they’re the person that’s right for the system to award, if that can be done at discovery day, then you might make the award at discovery day. But mostly it’ll happen after you’ve sat behind the doors with your team talking about the candidate and coming up with a collaborative decision to award or not. So if somebody says, “Hey, I’d really like to buy,” we’re not going to say no unless a team at the end of that day says, “Not a good fit.” But if they come back and say it’s a good fit and they want to buy, sure, we would offer…we would award on that day and they can sign and pay on that day.

Amanda: So a lot of different ways that it’s handled depending on the company and, you know, what their philosophy is and how they approach that event. And you mentioned, you know, the seven departments that every franchise company has.

Mike: I added an eighth.

Amanda: An eighth. Seven and potentially an eighth. Is there anything specific as we go down the list? Last time, you talked about the operations piece as an example and what does that process look like? And if I wanted them, you know, to come out and visit my office, what’s the timeframe and how do I get signed up for that? But is there anything, you know, if we talk about like marketing, things that I should be aware of, things that I should ask, things…you know, because obviously, in the presentation and in my validation calls, I’m going to come with my own questions, but are there things that you, having done this for as long as you have, would recommend?

Mike: Well, if marketing is important to you, you’re going to have vetted that out with franchisees during validation. Now, you may come to the discovery day to just ask the questions of the marketing manager or director or VP to see whether there’s consistencies, but your answers around that are pretty much clear when you’ve completed validation and have discussed that with your development manager. What you might do at discovery day is just validate from the department head whether the reality is what you heard or whether there’s anything more that’s missing or anything more that you need to be aware of. But, you know, if I’m sitting in front of the marketing manager, I want to understand how branding is done in this business or in that model. I want to understand how you create awareness, you know, through your marketing efforts.

And, you know, the models are different. Some have, you know, massive budgets for TV and radio. Some still do a lot of print, others are really heavy on social media. It just depends on the model and the industry in terms of what you’re going to want to ask a marketing manager about. So, if we’re heavy on social, then I would want to sit there and say, “Tell me about your social. And how do you help me generate awareness in my local market because there’s never been your business in my marketplace?” So that’s what people do. But a lot of that they would have gotten, and it’s really just validating whether or not what they heard is accurate.

Amanda: So what about like the technology piece as an example? What are some things I want to be cognizant of when I’m talking to the IT person?

Mike: Well, I mean, are you up to date? Number one is, you know, how up to date are you on technology and what’s your vision over the next six months, a year, two, three years? Where is technology headed? So, you know, you can talk to franchise owners about their technology and whether they like it or not, but they’re not going to tell you what their strategy is for technology in the next two, three, four, five years. That’s a great question to ask your VP or director or manager of technology, whoever you might have in that position. That’s what I would want to know. I’d want to understand the systems and what’s the next evolution to the systems or what is the next evolution to how technology is going to assist my business going forward.

Amanda: Exactly. I think, you know, it’s 2019 and as relevant as it is to a burger franchise, it is to a home care franchise because everything is moving to technology. So, you know, does that person have their finger on the pulse of where things are headed with technology related to their industry and what are they doing to be prepared for that? Because I feel like technology especially is changing faster than, you know, we can keep up with it. So, that’s a big one because it is something that changes so rapidly and you want to make sure that that person’s in the know and has their finger on what’s going on.

Mike: Well, in companies that don’t stay up to date or don’t think strategically about where they need to go with technology, they go out of business, they don’t survive.

Amanda: We talked a couple of episodes on Blockbuster, right?

Mike: Absolutely.

Amanda: I mean everything moves to on-demand and web-based and they didn’t move with them and…

Mike: You don’t see them anymore.

Amanda: And I do miss that Blockbuster sign. So what about, what else did you mention, training? What are some things I want to talk to that training person about?

Mike: Yeah, so, I mean, for me I have a little bit of a passion for that anyway. But if I’m coming into an organization to talk to the manager or director or VP of training, I want to know what that initial training looks like because a lot of people I’ve talked to in validation don’t really remember all the specifics of training. It’s kind of the details get fuzzy after a few years.

Amanda: I was gonna say when you’ve been doing it for 10 years, I don’t remember the first month that I was doing this as clearly.

Mike: But it’s also evolved, right? So if you talk to somebody who’s been in it 10 years, the training today isn’t what it was 10 years ago. So, I want to know what, you know, the academy or training looks like, how long is it, what will you be covering? Now, you can get that information in the FDD because item 11 in the FDD has the training curriculum, has the people that are covering the topics and the hours. So I could take that FDD with me or I can have it on my laptop and pull it up and say, “Can we run down the training curriculum?” And I would do that if I’m really interested in understanding about my initial training. But I think the most effective training that at least I’ve experienced is one that is based on a continuum of your model.

So, you know, I say, well, everything starts with lead generation and then once you generate leads, there is a series of things that happen that have to take place in your franchise, and it has to be supported by departments that will help you along the way. There’s a continuum of that, that you should understand and know, and the training should focus on that continuum. And what it should do at the end of the training is be able to create such a strong picture of how everything works together and how it works, you know, how it’s synchronized, if you will, that when I go back to my office and I’m ready to open up my business, I now know lead generation, that starts, that’s where marketing kicks in. I’m generating leads. I now know what happens on the very first touchpoint to a time where they had been acquired as a client and all the steps that have to happen in between have been synchronized through a very effective training program that takes that continuum into consideration. And if I’m here at a discovery day, I want to understand that.

Amanda: Absolutely. And, you know, all these things are important to focus on but, you know, when I go back to my business and I understand and I’m focusing on training especially because I know a lot of people…you know, buying a business, especially, you know, buying home care, a home care franchise because I believe in the mission and it aligns with my personal mission, and we are on “Franchising With Purpose,” it’s a very purpose-driven industry, but I may not know the first thing about running a home care business. But financials, all the things that I, you know, need to know to make this decision are there. So, you know, I go back to my office that first day and I’ve opened up, I want to know that my training program has prepared me not just to understand the steps, but to actually be able to execute them. So is that something that I would talk at this point with, you know, whoever that manager of training is about not just, you know, get my head around the steps, but I want to be able to go back and do those things? Because there’s a difference between understanding them and the concepts behind them and actually demonstrating those things.

Mike: Yeah. So, in franchise companies, training doesn’t start with your initial onboarding training as a new franchisee. That’s the beginning of your training. Training is woven into all aspects of the business. So, you know, as you go back to your office, to your point, and you’re trying to understand the systems again because you remember it being trained to you but you don’t remember exactly how it’s done, you know, training is there to support that. So, it could be, you know, retraining or, you know, getting you back up to speed with what you were already trained on, and that’s on an ongoing basis. There is, you know, sales that come through training. There’s, you know, efficiencies and marketing stuff that comes through training. It’s not just that you come to a home care training and get what you learn and then that’s it, you have to go figure it out.

The beauty of buying a franchise is that training is woven into all the things that happened going forward. But if it’s not training, it’ll be operations, it’ll be sales, it’ll be finance, it’ll be compliance, it’ll be legal, it’ll be, I don’t know, marketing, it’ll be technology. All those folks that you’ve met at discovery day are the people that lift you up once your doors are open and help guide you when you need guidance. And that is all coordinated through the training department. Much of that is coordinated through training.

Amanda: And the last thing that I’ll ask about training is how close…so a concern for people maybe, you know, and you just mentioned, I’m going to learn all these things and then when I actually have to do it, there may be some time there, and we’re going to talk about the opening process, right, from when I sign that agreement to open my doors. But is that something that I should be asking or being aware of how closely to opening my doors does that training process take place? Because I feel like if I don’t use it, I’m going to lose it.

Mike: Yeah. So when you come out of training, and I know that the last step to doing from training to open up your doors, there’s one major final step, and that’s the launch process, or the grand opening support process, or you know, whatever the company calls it. In our vernacular, it’s called the launch process, which takes you from the training you had to the grand opening of your business. And there’s a lot of things that happen there, which I know we’ll get into. But at discovery day, you will have seen that process play out. So, you will have talked to the training manager, you’ll have understood the course curriculum and anything that you want to know about what they do at training and beyond, you’ll have met in that process the launch manager to understand what they do to take you out of training and hold your hand to the time your business is open. Actually, and even before that because…but when we get to launch, I’ll backtrack a little bit. They pick up at the signing of the agreement. And then in that process, they prepare the candidate to come to training and then training trains and then they pick back up and take it the grand opening. So…

Amanda: So what about, and you talked about everything kind of weaves in through training, so I maybe should have saved that one for the end here, but finance is a big one. What are questions when I meet that VP or director or whoever of finance, what are things that I should be cognizant of or aware of? And again, if I’m a finance person, I’m going to come with a different set of questions because it’s what’s important to me and it’s my background and it’s what I know versus somebody who’s maybe a marketing person. But what are some key elements, regardless of my background, that I should focus on there and be aware of?

Mike: I think the big thing with financing, especially when you’re new, is the banking arrangement. So, you know, where do monies go, what accounts will I have to have, what are the royalty arrangements or your general marketing fund arrangements? You know, what are my responsibilities for reporting to the finance department in terms of my weekly numbers or monthly numbers? What can finance provide me in terms of benchmarking data financially on the business? There is a bunch of things that you can vet out at a discovery day when you’re meeting with that manager or director or VP or CFO individual who’s running the finance department.

Amanda: All right. And I think that ties…the last two kind of tie pretty closely together, legal and compliance. So we talk about the legal department and who’s involved in that. What are things that I want to talk to them about?

Mike: Well, understanding the relationship. You know, compliance is about making sure that you are using the proper forms and materials. You have all the necessary things that are required either by Griswald or the state that you have been trained on. It’s compliance. They want to make sure you stay within the lane and don’t get yourself in trouble. Legal is more for the franchisor side, you know, which is, you know, what do we need to do to make sure we ensure protection of the brand, you know, and understanding what that relationship is. So if you have either onsite or outsource legal franchisees and you understand what that relationship is, that the relationship between a franchisee, who is that prospective buyer that bought, and legal is not one of client and legal, it’s not a client relationship with legal here. It’s the understanding legal ramifications and then getting enough information to understand what I need to do in my local market with my own attorney to make sure I’m staying within the legal guidelines of federal, state, local, whatever it may be.

Amanda: And we go back to the compliance piece because just as important it is for that IT person to have their finger on the pulse of where technology is heading, you want to make sure that your compliance person, correct me if I’m wrong, but heard you say, that they have their finger on the pulse of regulations and your different state regulations and legislation and all that. And it varies by industry.

Mike: They’re the day-to-day…

Amanda: Like some industries are more regulated.

Mike: They’re the day-to-day watchdog, in a good way, not a bad way.

Amanda: Yeah. No, that’s important, right. Want to make sure that we’re doing things the right way and maintaining all the state regulations and compliance and all the things that we need to do there. But that’s kind of their role and, you know, you want to make sure that that person’s got…they know what’s going on and, you know, has the tools and things to support that.

Mike: Legal is much higher level. It’s brand infringement, trademark, intellectual property, things that would hurt your business potentially that you would need to understand and have direction on.

Amanda: Awesome. Did we miss sales? That was the eighth. You want to talk about sales, anything that I should be aware of? Because you said some companies may or may not have that, like, the seven are the key.

Mike: It could get mixed. Sometimes sales gets lumped in with operations. Sometimes it gets lumped into marketing. You know, sales depends on the business. You know, there are businesses that require you to have to sell and there’s businesses that require your marketing and advertising to drive leads. So, you know, but there’s a sale period. When you’re walking within a franchise system, the awareness piece is that when you’re interacting with two sides, franchisees have their interest, the franchisor has their interest, you hope that they align and in good systems that are collaborating with their systems, they align. But the interest is still different even in that alignment. And so, you know, building your business, it’s not the franchisors’ right to dictate how you would build your business. As long as you’re abiding by the franchise agreement and operating ethically and honestly, you make those decisions.

But, you know, franchisors should be able to help sell you on what they’re doing, why they’re doing it, and why you would want to adopt. And using programs like that and approaches like that to help you grow your business and having data to support why you’re, you know, trying to sell them on this concept or that concept. So, you know, sales is different in every franchise system and, in my opinion, most closely tied to operations because they’re the front line of the business and they’re the ones that, you know, can’t go in and mandate what you do or don’t do, but they can inspire you, remove you, or sell you on what you should or shouldn’t be doing.

Amanda: And that’s their job is to provide the support and what you choose to do with it is up to you. Sounds like a pretty packed day.

Mike: It’s a pretty packed day.

Amanda: Talking to a lot of people on discovery day.

Mike: That’s why many companies don’t use it as closing day because there’s a lot to unravel after you leave the discovery day, you know, because that’s really your opportunity now to take all the pieces that you’ve learned from your initial learning to the FDD, to the franchise agreement, to validation, to who and what you’ve learned at discovery day, put all that together and mix it up and see what comes out. And at the end of that, what comes out is either they sign a franchise agreement or they move on.

Amanda: Good to know. Yeah, it sounds like a lot of information. I should be prepared to come with an empty brain because it’s going to get filled up with lots of stuff and give me lots of things to think about. Any other parting remarks on discovery day?

Mike: No, I think we’ve covered it all.

Amanda: All right. Awesome. We’ll see you next time.

Mike: Thank you.