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What Is a Franchise Discovery Day and How Should I Prepare?
Franchise veteran Doni Ferreira shares his expert insights on what to look for in a franchise Discovery Day and how to make sure you're ready.
In the world of franchising, where opportunities abound and the decision of selecting a brand shapes futures, the concept of Discovery Day emerges as a pivotal moment for aspiring franchisees. Doni Ferreira, franchise development manager for iTrip and an industry veteran with 11 years of franchising experience, sheds light on this crucial step in the exploration of franchising opportunities.
What Is a Discovery Day?
In short, a franchise Discovery Day is a special day set aside by a franchisor to provide candidates with a hands-on overview of what it takes to operate one of its franchises successfully.
For brick-and-mortar franchises like restaurants, the Discovery Day often involves a physical visit to the store in the company of the franchise development team. This gives the candidate an opportunity to witness the intricacies of operations, from back office processes to consumer-facing interactions. It's an immersive experience designed to give the candidate a genuine feel for what it would take to run that given franchise.
However, not all franchises follow the same model. Ferreira pointed out that a traditional physical Discover Day might not be feasible for service industry franchises like iTrip, which operates on a home-based business model. Still, candidates for iTrip are not left in the dark; they have ample opportunities to evaluate what iTrip is all about, including a comprehensive overview of the franchise and a deep understanding of the business model.
Ferreira emphasized that the Discovery Day process is all about providing the candidate with an opportunity to make an informed decision. "It's for the candidate to make a better-informed decision," he explained.
How Should I Prepare for a Discovery Day?
When preparing for a Discovery Day for a franchise, you should start by looking over the Franchise Disclosure Document (FDD) and other critical documents. Ferreira highlighted the importance of the FDD — a document required by all franchises, from giants like McDonald's and Subway to niche players like iTrip that discloses information about the brand’s business model, number of locations, initial investment costs and the financial success of existing locations.
Ferreira also suggested that franchisees engage in validation calls before the Discovery Day if possible. Validation calls are conversations with existing franchisees who share their experiences and insights with the brand.
“New franchisee candidates can have one-on-one validation calls; that's an important step prior to the Discovery Day, to talk to franchisees and get to learn about their journey and take a deeper dive,” he said.
These conversations provide valuable insights into what to expect from your own potential business ownership experience.
Discovery Day: The Itinerary
While each brand will do things a little differently, the Discovery Day typically gives the franchisee candidate a chance to speak with various members of the leadership team and learn how the brand is being run, both corporately and at franchised locations.
Ferreira provided a glimpse into iTrip's Discovery Day process, which unfolds in nine steps.
“We have a self-scheduled discovery process which includes one-on-one conversations with my team members, including a one-on-one conversation with the CEO and a full FDD review call. We sit with a candidate via Zoom to go through the FDD and address questions on each specific item to make sure the candidate is well informed before they make their decision,” said Ferriera.
Red Flags and Good Signs
One critical element of the FDD is the Item 19, which details the past financial performance of the brand’s locations. While it's not mandatory for a brand to disclose this information, having an Item 19 offers candidates a glimpse into the franchise's financial history. The lack of an Item 19 can be concerning as it translates to a lack of transparency.
“Not having an Item 19 is a motive for questioning. You want to ask the franchisor why they have not provided this information, because that could be the biggest red flag,” said Ferreira.
On the flip side, a well-defined and organized Discover Day process bodes well for a brand as it can be an indicator of success. If the process feels rushed or disjointed, Ferreira advised taking this as a warning of the brand’s lack of organization.
“It shows that the franchisor is probably not really taking into consideration the candidates’ time and the candidates’ motive to put down, oftentimes, over a hundred thousand dollars, sometimes much more,” he said.
A clear, thorough Discovery Day process is essential for candidates who are about to make a significant investment.
Finding the Right Fit
As Ferreira emphasized, the franchisee-franchisor relationship is akin to matchmaking. Not every franchise is suitable for every candidate, and vice versa. The Discovery Day becomes a crucial juncture where both parties assess their compatibility.
For prospective franchisees, Ferriera urges you to do your due diligence, looking at multiple brands and speaking to as many people affiliated with each brand as possible. This includes existing franchisees and members of the leadership team.
“It's not something that you should take lightly,” he said.
For franchisors, Ferriera has similar advice; it’s all about finding the right match.
“Don't just take any candidate that has a heartbeat and cash. You have to make sure that the candidate is a good fit for you in order to sustain the relationship.”
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