What are the factors in evaluating a franchise fit?
One of my newsletter readers looking to buy a business franchise asked: “What questions should I ask to see if a franchise business is right for me?”
Before you buy a business franchise, you will benefit tremendously by reading my book, “Start: The Starters Playbook.” Franchises have a failure rate comparable to non-franchise small to medium business start-ups. Potential franchisees need to be careful of scams and honest in evaluating their fit for a particular type of business.
Assuming you have answered the early questions about whether or not to buy a franchise and the industry you want to be in, here is a set of questions based on my experience. Analyze the priority and many positive/negative responses taken together, not in a sequence. The questions are not in any order. Pick those relevant to you. All are critical.
1) Is the Franchisor the brand leader?
2) Who are the competitors, and do they also franchise?
3) Why is the prospective franchisor selling franchises?
4) What are the territory rights?
5) What is the requirement for development pacing?
6) What support is there for site research, selection, and development for my unit(s)?
7) How big will my business become over what timeframe- to meet my capital constraints and the franchisor’s development plan?
8) What are existing franchisees saying?
9) What are the support systems?
10) What qualifications do the franchise representatives/coaches have?
11) What is the cost of developing the recommended unit?
12) What leeway does a franchisee have, and in what areas are standards non-negotiable?
13) What is the franchisees’ litigation record against the franchisor?
14) Exactly what are the things that can cause me to lose my franchise?
15) Who are the key people in the franchisor’s organization? Are they accessible to you?
16) What percentage of the franchise system is franchisor owned and operated?
17) What is the profile of the other franchisees- net worth, territory size, number of units? How do I fit in?
That is a quick list and an excellent place to start. If you need more help, contact me at satish@dhaakar.com. I would love to hear about your experiences! Please share your stories at Satish@dhaakar.com. Please forward it to those who could benefit from my newsletter. They can subscribe to it here or by clicking on the link below.
Thank you,
Satish Mehta
Author, Speaker, Coach
Blog
Knowledge Letter Sign Up
