No is never fun to hear especially when it is not your decision, but the franchisor’s decision. However, sometimes “No” really is the best answer.
First, why would a franchisor say no to you? Franchising is a relationship. The franchisor needs to feel you have the skills, financial capability, and confidence to drive a successful business. If during your due diligence, you stopped and started, thus potentially demonstrating you were too busy to focus on your investigation, the franchisor may say no. If during your due diligence, you validated with more than a dozen franchisees, and yet you still could not make the numbers work to your satisfaction, the franchisor may say no. If during your discovery day, you ask questions in an aggressive or combative tone, the franchisor may say no. If the expectation of a decision within a certain timeframe post discovery day was set, and you agreed to it before discovery day but then did not stay committed to that decision timeframe after discovery day, the franchisor may say no.
Whenever a franchisor says no, their decision does not come easy. They have invested just as much as you have, and they do not want to hurt you. But sometimes, when they step back and evaluate the long game, they have to make a decision that they feel is best in the moment. If they award a franchise to someone that they are uncertain about, they may regret that decision for the term of the agreement. In the long run, that may end up costing them and you much more than if they had just said no.
So, how can you protect against the franchisor saying no to you, or better yet get the franchisor to fall in love with you such that they are begging you to join their family?
That is easy, actually! Show up to scheduled calls. Listen and ask good questions as they come up. Do your homework before each meeting so that you are prepared. Be open and coachable. The franchisor is not the enemy nor are they trying to sell you. They have proven processes, and they want franchisees who are coachable and who want to follow their lead. Validate the opportunity with 4-8 franchisees, but make your own decision about what is possible for you. Be fun to work with and have fun learning and growing into this idea of becoming a business owner. Be the type of person you want to be around. If a candidate is easily agitated or combative before the franchisor takes their money, what happens after they take their money? Money will intensify emotions, so sometimes, no really is the best answer.
The #1 reason a franchisor may say no is if you are trying to validate a specific net return. Since there are no guarantees in a business, what others are netting is irrelevant to you. Getting down into the weeds of validation such that you believe you have a perfect proforma, and those numbers are what you are basing your entire decision on - that is probably the fastest way to get a franchisor to run for the hills. That is the equivalent of telling your partner I will marry you, but you better look as you do today for the next 50 years of our lives, or I will not love you. There are no guarantees, so you cannot make a decision based on a specific EBIDTA or net return. That ability does not exist because you are the single biggest determining factor of success in your business. You are the most important variable! Thus, you have to be comfortable with uncertainty, and be committed when times are good as well as when times are tough.
If expectations were set about a decision timeframe, commit yourself to that timeframe. It is okay to say yes, but I have a small punch list before closing. It is not okay to say I need two more weeks to think about this. Well, anything is okay! You can certainly take two more weeks, but do not be mad if the franchisor says that they will not hold the territory for you. As a business owner, you will have to make decisions without all the facts every day. You will have deadlines to meet. If you cannot demonstrate that you can make decisions without all the facts or meet deadlines, the franchisor could be saving you and them a lot of heartache if they say no.
Franchisors want to help you achieve your dreams, and they want to grow their brand with your help. If they say no, it probably really is in everyone’s best interest. Rather than getting mad or bad mouthing the franchisor, learn from the experience and apply it to another investigation. Everything always works out as it should, so do not lose sight of your dream. Have faith in the process; the same faith you need to say YES! to your dream!