The Top Discovery Day Red Flags | Entrepreneur

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After decades of transforming single-location concepts into global franchise powerhouses, I’ve developed a sixth sense for spotting the right franchisee partners. While many aspiring business owners believe our discovery days are simply their chance to evaluate our brands, the reality cuts both ways: we’re also carefully assessing whether they have what it takes to succeed in our system.

What surprises many is how often we turn away seemingly qualified candidates after their discovery day visit. These aren’t casual rejections, they’re strategic decisions to protect our brand integrity, existing franchisees, and ultimately, the candidates themselves from a potentially costly mismatch.

Here are the critical red flags that prompt us to decline otherwise financially qualified franchise candidates:

They haven’t done their homework

Nothing signals impending failure more clearly than a candidate who arrives at discovery day with fundamental misconceptions about our business model. I recently met with a prospect interested in our skincare concept who couldn’t name three of their most important services on the menu or explain their key service differentiators.

This lack of basic research indicates either poor preparation or, worse, a casual approach to a six-figure investment. Successful franchisees immerse themselves in understanding the brand before signing on. They visit multiple locations, experience the customer journey, and thoroughly review the Franchise Disclosure Document. Those who skip these steps rarely succeed in execution.

“I know better” syndrome

Some of the most problematic candidates are those who arrive with supreme confidence that they can “fix” our established systems. During a recent discovery day, a candidate interrupted one of our franchisor’s operations presentation multiple times to explain how he would change their kitchen layout, use a different POS system, and update their marketing strategy.

Remember: franchising is about system replication, not system reinvention. When candidates demonstrate they can’t follow established protocols during a one-day visit, it’s a clear indicator they’ll struggle with our playbook in daily operations. The best franchisees balance entrepreneurial drive with the discipline to execute a proven system.

Looking for a passive investment

Franchising is not a turnkey, absentee operation — at least not initially. Candidates who speak primarily about the franchise being like an ATM machine and minimizing their involvement raise immediate concerns. One recent prospect asked whether he needed to be physically present at his location more than once a month, while proposing opening three units simultaneously.

Successful franchise owners are engaged leaders, especially during the critical first 18-24 months of operation. Those seeking purely passive investments typically underestimate the hands-on leadership required to build a solid foundation and team culture. Their units often struggle with consistency and customer experience.

Financial incongruence

Beyond meeting our stated financial requirements, we look closely at a candidate’s overall financial picture. Red flags emerge when someone would need to stretch dangerously thin to open a location, or when their lifestyle expectations don’t align with realistic first-year earnings.

I recently declined a candidate who, despite meeting our net worth requirement, would have needed to liquidate nearly all assets to fund the startup. Another had current personal expenses that would require withdrawing profits that should be reinvested during the growth phase. Such financial stress inevitably impacts business decisions and operational quality.

Poor cultural alignment

Perhaps the most subjective but equally crucial factor is cultural fit. How candidates interact with our franchisor team, existing franchisees, and even restaurant staff during their visit reveals volumes about their leadership style and values.

Dismissive behavior toward staff, excessive complaints about travel arrangements or accommodations, or disrespectful treatment of team members are immediate disqualifiers. One otherwise promising candidate spent his entire visit criticizing minor operational details while failing to recognize the positive customer experiences happening around him. His negative focus would have made collaboration with our support team nearly impossible.

“Get Rich Quick” mentality

Franchising builds wealth through consistent execution over time, not overnight success. Candidates fixated on rapid expansion before mastering operations rarely succeed. I recently met with a prospect who spent our entire conversation discussing his ambitious timeline to open 20 locations in two years, without any questions about unit economics or operational challenges.

This growth-at-all-costs mindset typically leads to underperforming units and system-wide reputation damage. We prefer candidates who demonstrate focus and commitment to mastering our models before expanding too rapidly.

The right partnership matters

After helping build numerous franchise systems from local operations to national and international brands, I’ve learned that rejecting the wrong partners is as important as selecting the right ones. A single misaligned franchisee can consume disproportionate support resources while delivering subpar results.

For prospective franchisees, understanding these red flags offers valuable insight: the most successful franchise relationships resemble marriages more than transactions. They require alignment on values, expectations, and a shared vision for execution. The strongest candidates recognize discovery day as a mutual assessment process. They arrive prepared, listen more than they speak, demonstrate coachability, and focus on how they’ll execute our proven system rather than how they’ll change it.

When both franchisor and franchisee approach the relationship with this level of diligence and respect, the foundation is laid for the kind of partnership that fuels franchise success stories.

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