How to Perform Digital Franchise Due Diligence

In today’s digital world, the franchise prospect has gotten progressively smarter and more efficient with doing their homework on a franchisor’s opportunity. In the past, a brand’s business footprint was limited -- primarily to franchisee validation and the would-be buyer’s general perception. Today, future franchise buyers have a multitude of immediate resources at their fingertips to learn about a brand.

“Almost all investigation of a brand and education on the opportunity is happening prior to engagement with a development person,” said Steve Beagelman, CEO of SMB Franchise Advisors. “The prospect’s investigation is done through research on the Internet, including not only the development website, but social media such as Facebook, LinkedIn and digital press.”

Many franchisors are very careful with their digital footprints -- investing in reputation management and properly monitoring what is being said about their brand. However, in a world where what happens on Facebook spreads across the web, franchisors need to understand how the candidate will behave and search the web to enhance the positives and decrease the visibility on negatives.

“Tomorrow’s franchisees are going to be smarter,” says Michelle Rowan, President and COO of Franchise Business Review.

“The candidate will look on the Internet for third party validation of the brand,” she said. “They will look at awards and data from sources other than the corporate team. These can include franchisee satisfaction surveys and NPS scores from customer satisfaction surveys. Also, they will check out consumer sites and reviews and competitors in both the franchise and non-franchised space.”

Franchisors should walk a day in the life of a franchise prospect to better understand what they see and create a marketing strategy to put its best foot forward. Rowan suggests that brands be transparent, understand that candidates will look at competitors, and guide the would-be buyer to the right places around the web.

“Encourage prospects to visit other sites. Point them to your awards and press releases, but encourage them to Google and look for other information on their own,” she said. “Pointing out your differentiators, then telling them to look for the same things from others, will help your brand rise to the top if it's the right fit for both you and the candidate.”