Reflect Often; Identify and Address Concerns Early

My initial review of a franchise opportunity is very detailed. Insuring my clients understand their rights, the obligations of both the franchisee and franchisor, the history and information provided in the FDD and a legal review of any registrations required and form of disclosures provided is essential. It is imperative that my clients be educated and prepared for the opportunity in front of them, thereby minimizing surprises down the road.

Client's are an integral part of the review, as I request they reach out to current and in some cases former franchisees of the system, to query them as to the service and training provided, their satisfaction with the franchisor, sufficiency of the franchisors support, service and overall guidance in keeping the system relevant and poised for long term growth and success.

When we discuss my analysis of the franchise opportunity, a key component is discussing the conversations with existing franchisees and their responses to the topic areas. The goal is for the client to know the system, his rights, his obligations, and at the same time have a real sense for how the franchisor, and the business, operate in the real world.

I have begun to provide parts of the questionnaire to clients that come to me with disputes, to benchmark and uncover areas of the agreement that may not have been lived up to, and to categorize the type of system that my client is operating within. I have also provided focused questions to many of the associations I represent to allow them to strategically identify and focus on those areas that will impact the franchisees bottom line and make the biggest positive impact to the system.

The list of questions provided in an initial review is extensive and focused on different areas of the opportunity; I've listed a few below to provide a sense of the scope. It's imperative to get any new opportunity evaluated, but once in a while taking stock of the system you are currently in may open your eyes to areas of improvement needed in your operation or your franchisor's.

  • Are you making the amount of money you expected to when you got into the business (if not; what is the reason?)
  • Do you plan to expand?
  • Who are your primary customers and competitors; does your operation meet their needs and is the marketing clearly targeting them?
  • Does the franchisor honor its commitments?
  • How does the franchisor handle disputes/problems; do they work with the franchisee or do they take a defensive posture?
  • Is there a strong franchisee representative group?
  • What would you tell a prospective franchisee to be careful about if they were buying a franchised business in your system?
  • Would you recommend the franchise to a family or friend?

Take a moment to reflect on your responses; are you totally satisfied? Are the concerns or glitches in your system under your control or your franchisors'? How can they be addressed? Identifying issues early and making sure you are pointed in the right direction for future success is key, if you don't ask the questions, problems get swept under the rug or ignored, causing much more damage down the road. Reflect often, identify and address problems early!!!!

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