Discovery days are an event franchisors hold to showcase the business to prospective franchise unit owners. This event provides the opportunity for future owners to meet with the management team, learn about the business opportunity, and ask questions about the tools and training the franchisor will provide to help them succeed.
When should I attend a discovery day event?
Most franchisors recommend that you attend a discovery day event shortly after receiving and reviewing their franchise disclosure document (FDD). Many host monthly or bi-monthly events to ensure that prospective owners can meet and discuss the opportunity with minimal delay.
Where will the event occur?
Discovery days usually begin at the franchisor’s home office. This location grants potential unit owners access to management team members and others who can explain the experience of owning a franchise unit. However, some franchisors host discovery days in a variety of cities to access a greater number of potential owners.
What happens at the event?
Discovery days usually include at least three activities:
Most franchisors invite leaders from their finance, marketing, and operational teams to speak about the opportunity and the ways in which franchise units are managed.
Franchisors set aside time for prospective owners to meet with representatives who can answer questions about the opportunity and ensure that the potential owner is a good fit for the franchise.
Over the course of the day, franchisors often invite prospective owners to tour one or more nearby franchise units. This allows future owners to meet with experienced owners, witness the flow of operations, and ask questions that can help them make an informed decision about acquiring a franchise unit.
What should I do to prepare for discovery day?
One of the most important ways to prepare is to name what you need to feel comfortable investing in a franchise and, conversely, the red flags that would drive you to consider other options.
Common must-have qualities include extensive training, ongoing support, and the opportunity for franchisor financing, but you may have a few other qualities that you must see to move forward.
Common red flags may, of course, include the absence of those qualities, but they can also include the following:
- Personality misfits
- Disorganization, confusion, or conflicting pieces of information
- Hard sells and pressures to sign up quickly, possibly to avoid a lengthy due diligence process
- Promises that aren’t put into writing
- Reluctance to share the contact information for other franchise owners
- An unwillingness to provide clear answers to direct questions
- Plans for rapid expansion that may put strains on available resources and opportunities for support
Next, you should prepare a series of questions that will help you decide whether to invest. Here is a short list of some popular questions you might ask during your discovery day event:
What are the franchisor’s plans for growth?
How much training is offered to new franchise owners?
How much support is offered after a franchise unit has begun operations?
Does the franchisor provide financing options?
Are there any working capital requirements?
What role does the franchisor play in site selection?
Does the franchisor offer any territorial protections, or will it allow other franchise units to open without restriction?
How are disputes between the franchisor and franchise unit owners settled?
What are the causes of franchise unit failures, terminations, or bankruptcies?
Your preparations will help you with one important part of discovery day: ensuring the business aligns with your goals and objectives.
However, there’s another important aspect to the event you need to keep in mind: demonstrating to the franchisor that you’ll be a good representative of the brand they’ve worked hard to build. Be ready to impress the people you meet by dressing professionally, developing a brief pitch of your experiences and financial resources, and bringing along business cards with your name, phone number, and email address.
What happens after discovery day?
After the close of discovery day, you should review what you’ve learned and write down any other questions you might have about the business. Once you’ve compiled a short list, contact your franchise representative and ask for the answers you need to make a decision.
If you and the franchisor decide to move forward, your franchise representative will provide you with a formal franchise agreement. Then, you’ll begin a period of due diligence. You, your attorney, and your accountant will spend time reviewing the terms and conditions of the agreement and the risks and potential outcomes that could result from entering a contract with the franchise.
How should I proceed?
There are four steps you can take to prepare for the steps ahead:
- Read our guide, A Crash Course on Franchise Agreements, for a primer on these important contracts.
- Learn more about the due diligence process in our article, Considering a Franchise? Here’s How to Make a Smart Call.
- Start searching for an accountant and an attorney who can help you through the review process.
- Log into your owner’s portal to access other articles, checklists, and advice that’ll help you navigate your next steps, including finding a location, choosing sources of financing, and hiring your team.