Analyze the Franchisor

Analyze the Franchisor thoroughly

Does the franchisor have sufficient financial backing?
Is the franchisor a subsidiary of another company?
Who is the parent company? What are their assets?
Do they have company owned branches? Would they be in competition with you?
Can you see any of the franchisors recently audited financial statements?
Get to see the contract and disclosure document? Is there an earnings claim?
Is it based on company run or franchisee run outlets?
How long have each of the outlets, used as a basis for the earnings claims been in operation? Are they similar type of locations to yours?
How long has the franchisor been in business? How long has he been offering franchises?
What is the business experience of the franchise companies’ directors?
Have any of the franchisors partners or company members ever gone bankrupt, been involved in a Receivership or Liquidation.
Have any of them been involved in litigation recently or been banned from holding company directorships in the past?
Is it a Limited Liability or public company? you may be able to obtain copies of their annual reports
Have you read and studied the prospectus? Get someone you trust to talk it through with you
Does the franchisor help with finance? Or recommend a source of finance
Do they have the kind of reputation and credit rating which would help you to obtain the financial backing needed to purchase the franchise?
Is there a Franchisee’s Members Committee, who are they, can you meet them?
How many franchisees does the franchisor have? How many does he plan on having?
Where will these be located? What territorial protection will you get
Does he have a good marketing plan? And an on-going advertising budget?
What is that advertising program? Ask to see a copy, are you expected to contribute towards national advertising?
Are you contracted to spend a specific amount on local advertising?
Do you have any say in the advertising format? And is there input to the advertising campaign from the Franchise’s Members Committee.
Do they provide a proper start-up training program? Who pays for this?
Does the franchisor provide on-going training, and other continuing assistance? Will you have the support of a Local or Regional Business Development Manager
Does the franchisor enforce regular inspections of the franchisees to maintain high standards and quality control?
Will he help recruit your personnel and attend interviews?
Do you receive initial opening stock or supplies? Is this included in your Franchise Fee or at a discount
Does the franchisor insist on their design for store layouts, displays etc.?
Does the franchisor help with stock taking and stock control?
Do they provide an affiliate network for purchasing discounts?
Do they provide bespoke and up to date software for administrative and bookkeeping procedures?
Is the franchisor innovative and acceptable to changing his sales methods?
Very Important!! Is there a helpful and fully explanatory manual
Do they have a constant training program for your staff
Is the price of the franchise negotiable? How?
Is it possible to pay a Resale Franchise, or can you purchase used equipment
What is a typical day like?
How long will it take to see a return on your investment?
What are the Franchisors Unique selling points

Don’t be put off by all these points, we have included so many to enable you to be aware of some of the issues. Lots of Good and ethical Franchisors will not be able to provide all of the information you may ask for. Additionally there are a lot of new opportunities and start up companies appearing everyday, some great ideas and it can be advantageous in join early.

Try to take a reasoned and rational view before coming to a decision. If you are still in doubt, don’t hesitate to contact us for our input choices@franchisevideos.co.uk

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