What a franchisor should bring to the table


  • Business
  • Wednesday, 12 Nov 2003

By LIM SOO KONG

IF you’re thinking of buying a franchise, it’s important that you understand what you should expect from your franchisor.  

It’s important that your expectations be reasonable. It’s just as important that you not settle for less than you should. 

  • A franchisee should expect a franchisor to have a successful system that can be easily transferred. If the system isn’t successful or proven, why should you as a franchisee pay for it? 

  • You should expect the franchisor to spend the time to answer your research questions before you buy. There are certain legal restrictions like those concerning earnings representations that may prevent a franchisor from answering some questions. But, other than those prohibited by law, all questions should be answered. 

  • You should expect that your franchisor is someone you feel you will be compatible with. You should like your franchisor and feel that the franchise’s vision of the future conforms to your own. 

  • You should make sure your franchisor and your franchise agreements are fair. The nature of a franchise agreement is usually at least somewhat slanted towards the franchisor. The owners of the franchise company have taken a risk and developed a business that you are asking them to teach you. In return, they will want to be protected and to control certain parts of the system. 

  • You should expect your franchisor to help you find a location that is suitable to your needs. Legally, many franchisors are afraid to “insist” you take a location that they have found.  

    Conversely, many are loath to let you pick a site on your own. The best solution is to have a franchisor that works very actively with you to find a location and gives you several choices to pick from. Find a site that both you and the franchisor like. 

    Make sure you don’t try to become a demographics expert overnight. It happens to all of us. We sign the franchise agreement, and all of a sudden we are magically endowed with great wisdom and insight.  

    Resist this temptation. I have seen franchisees insist they could recognise a good site better than a franchisor with hundreds of locations and over 25 years of experience. 

  • You should expect your franchisor to provide you with quality training. Talk to some of the newer franchisees and see if the training they received was complete enough to get them successfully into business with the fewest possible problems and glitches.  

    Check to see if the franchisor has a real commitment to current and future training, too. Find out what happens if you need additional training later on, either for yourself or for your employees. 

    Will you have to pay for it? The franchisor should, within reason, make training available to you, either at no charge or at a reasonable rate. 

  • You should expect your franchisor to think of you as an associate, a “partner”, and as a customer. This is a hard balance to strike, but you want your franchisor to be franchisee-friendly.  

    You can often find out much more about how a franchisor behaves by talking to other franchisees than you can by simply reading the franchise offering circular. 

  • You should expect your franchisor to be future oriented. It’s not enough to have a system that works well today and has succeeded up until now. 

    Businesses, like the world around them, constantly change. Your franchisor must have a good, clear vision of the future, and you must agree that the vision is the right one before you buy.  

  • Look for a franchisor that has a solid record of keeping its franchisees in business successfully. Some franchisors will move heaven and earth to help you succeed in business.  

  • You should expect your franchisor to have the human and financial resources to provide the support needed to give you the best chance of being successful.  

    Too often franchisors, like other growing companies, are short of money, people or both. While a younger company will obviously not have the resources of a major corporate behemoth, you must still make sure that your franchisor, regardless of size, has the resources needed to do the job for you properly. 

  • Expect your franchisor to use technology and communications to keep you ahead of the competition. Don’t underestimate the importance of this. If a franchisor is slow to embrace new technology, you could suffer. 

    There are a lot of things you should expect from a franchisor. This list does not cover all. Think of a franchise as a box of tools. You will want to have the very best tools for the job you want to, but you will still have to be the one that uses the tools successfully.  

    The more and better the tools, the greater the chances that you will be successful in your job of building a successful business.  

    So, expect the franchisor to provide you with great tools for the job you’re considering. Just remember that tools alone will not get the job done. 

     

  • Lim Soo Kong is president, Asia Pacific of Frannet, The Franchise Connection, America’s largest group of franchise consultants. 

    e-mail slim@frannet.comor www.frannet.com 

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