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Franchise Opportunity - 5 Considerations
Franchise Opportunity - 5 Considerations
In addition to the many questions that you should pose to a
potential Franchisor, and the many questions they should pose to
you, there are several other considerations for you to determine
your compatibility with a particular Franchise system. If you
are going to be getting into business with someone with the goal
of creating an outstanding future together, you should cover
more bases than just the basic questions to understand how the
business makes money. That will be ultimately important of
course, but several general considerations will be imperative
for you to analyze as well, if you really want to understand
your potential 'strategic-partner'.
Franchisor's Qualification System
One of the initial things you should strive to understand is the
level of development that the Franchisor's Candidate
qualification system has reached. Your first reaction to that
might be 'Why do I care about a Franchise Qualification system -
I only care if I get a Franchise or not?' I would suggest that
you should care a great deal.
After all, if the Franchise Candidate qualification system
hasn't been well developed, it may be a reflection on the
business of the Franchise itself. The most important asset of
any Franchise system will be its people, including both
Franchisees, and Franchisor staff. Almost all companies will
confirm that to be the case. They say it even if they don't
believe it. They say it even if they don't actually put systems
in place to ensure they add the best people, and nurture their
development over time. So how do you determine if the statement
matches the execution?
If people are the most important asset, it would follow that the
system of finding, qualifying, and granting Franchises to the
best Franchisees would be a well thought out and well developed
system. If there is no formal step-by-step system to provide
information to both parties then it may be an indicator that
there is something amiss.
A good system will be able to provide you regular information to
help you make an informed business decision about joining as a
Franchisee. It should also provide the Franchisor with
information about you to help them make an informed decision as
well. That decision should be whether you qualify as someone
they can describe as one on their 'most important assets'.
If the system doesn't allow for a step-by-step, give and take,
system of information flow, then perhaps the other business
systems within the Franchise aren't as well developed as
represented either. The information system shouldn't be so fast
that you are overloaded, but it should be steady enough that you
can continue to assess, and deliver information, at a pace that
makes sense for both parties.
If the system is too fast, for example if you are given
Disclosure Documents within the first week of the due diligence
process before many other things are assessed, I would suggest
there is something wrong. To rush is to err. On the other hand,
if the system is too slow, you won't get a true flavor for the
company because of the sporadic nature of the flow. Culture is
important, and a steady flow of data will give you a better feel
for the culture of the business than trading information every
three weeks for a six-month period. If you are not looking to
make a decision with 30 to 120 days, I would suggest that you
wait until you are to that point before you engage fully in a
Franchise Qualification system. That doesn't mean that you need
to be in business in that timeframe, only that you would like to
make a decision in that timeframe.
Some systems will include a step-by-step system where you will
receive information from the Franchisor, and then you will be
required to provide some information to them. Once you provide
the information, then the Franchisor will send you additional
data to help you gain more intimate knowledge...and so on. The
reason for that type of system, which I would judge to be ideal,
is that each of you is illustrating commitment to the process.
This is an important factor for the Franchisor to determine
because it is a great indicator to them that you will be able to
follow and use a good system to your advantage. That's what
Franchising is all about. The Franchisor has invested a
significant amount of time and money to develop a proven system
that is designed to earn all stakeholders a maximum return.
Therefore the Franchisor must determine that each new Franchisee
is willing and able to follow a good system. What better place
to start than the basic evaluation system.
In today's world, that system should use various media to
communicate with you including email, telephone, mail or
courier, Internet, in person etc. Again, this will demonstrate
the Franchisor's use of current technologies and methods to
really get to know you, and to stay current in an ever-changing
global environment.
If the Franchisor does not have a good step-by-step information
flow and due diligence system then that alarm bell in your head
should go off.
Communications with Existing Franchisees
One of the most important sources of valuable information will
be the existing Franchisees. The Franchisor's system should
include available exposure to all of the Franchisees. First of
all, in most jurisdictions where Disclosure Documents are
required, one of the required disclosures is a full list of all
Franchisees, including contact information.
If you get a feel that a Franchisor is discouraging you from
communicating with certain Franchisees - well, there's that
alarm bell again.
That's not to say that all Franchisees will be happy, or that
all will be great operators. In fact, most systems have
disgruntled or unsuccessful Franchisees. It will be important
for you to speak to the top echelon, the middle range people,
and the poor performers. The test should be to identify the
factors that differentiate the groups. Then determine how you
are more like the successful people, and how you are not like
the unsuccessful people.
The most important point is that the Franchisor has a system to
allow efficient access to all Franchisees. Some Franchisors will
provide email questions to send to all Franchisees plus ask you
to call your own sample from the complete list. Others will
provide for conference calls with several Franchisees. Others
will provide for Discovery Days including existing Franchisees.
Of course, conference calls and Discovery Days will include
'favorable' Franchisees. That doesn't mean those processes
aren't very helpful - you just have to realize who you're
dealing with.
Other Franchisors will ask you to talk to people in your
geographic area. Or people with a similar background. All of
these things make sense, but you must ensure that you also have
the ability to communicate with any existing Franchisee, and not
just the suggested sample. You will be able to judge the
Franchisor's openness through their reactions in this process.
Responsiveness
This one is fairly simple but very important. If the Franchisor
responds to your inquiries quickly and efficiently, it's
probably a good indicator of the type of responsiveness the
company executes as a whole. Of course, that becomes very
important when you require support once you become a Franchisee.
If a Franchisor takes several days to get back to you after your
initial inquiry, you should take that as a warning sign. If they
don't respond in an efficient and professional manner to your
email and telephone inquiries as you go through the process, it
probably means they are not running a tight ship.
A system that responds almost immediately, and then starts you
on a step-by-step information flow, including personal contact,
should be what you are looking for in terms of responsiveness.
Face-To-Face Meeting
The system of evaluation for both parties should include a
face-to-face meeting. After all, you are trying to determine if
you want to get into business together for 5, 10, 15 or more
years. If a Franchisor wants you to join the system without a
face-to-face meeting, it doesn't really make sense. Would you
start a partnership business without meeting your partner? A
Franchise is not an actual partnership, but the same criteria
should apply. It should actually apply to the Franchisor every
bit as much as to you. So if that meeting is not part of the
process, the system is incomplete.
There are several ways for the face-to-face meeting to take
place. Many Franchisors have development personnel that will
meet you in your community or a convenient location for both
parties. Some Franchisors require a head office visit. Others
will host Discovery Days, either at their head office or on a
regional basis. All of these methods are fine, as long as you
have some time for some one-on-one interaction.
I once asked a mentor of mine when our company was first
beginning to offer Franchises, about the best method to
determine that 'right' match. He said to me that the ultimate
test is whether you would be willing to have the person over for
a barbeque in your backyard. Of course, there are many other
factors, but his point was that it should be someone that you
would like to be in business with, and would enjoy their company.
The face-to-face meeting should also include an invitation for
your spouse to participate. In fact, some systems require the
spouse to be in attendance. Again, it is sensible to include
spouses at the discovery stage because the ultimate decision to
start a new Franchise business will be focused on building
family dreams, and providing family security for the future. If
a spouse is not fully aware and comfortable at the
decision-making stage, it could create difficulties down the
road as you build the business.
The main point is that if a face-to-face meeting is not a part
of the process, and your spouse is not welcome to attend, the
process is faulty.
Unified Thinking
I'm not going to spend much time with this point at this stage,
other than to say that the entire process of due diligence, for
both parties, should be about determining whether there is
unified thinking. My counsel is to step back at the end of the
process and ask yourself the following question: Did the process
help both parties to determine if they have unified thinking
about the business at hand? If the answer is not yes, then
you've either got more work to do, or something with the system
is not right and you should examine alternatives.
Franchising is about finding the right strategic-partnerships to
allow both parties to prosper at a higher level together than
they would if they were not to enter into an agreement to do
business together.
You must be comfortable with the Franchising concept itself.
It's the Franchisor's strategy to penetrate and dominate a
marketplace. You've got to be comfortable with the Franchisor's
strategies to do just that. If they make sense to you, it can be
a great ride in achieving success together.
You should assess your needs, wants and desires to make sure
that they can be met with a successful Franchise in the system.
You should bring to the surface all of your fears,
uncertainties, and doubts to determine if you can solve them
with the business and the future you can create. The worst thing
you can do is leave them buried.
Finally, can you see yourself reaching your goals, dreams and
objectives by operating a successful business in the
Franchisor's system? Will the Franchise help you to achieve
those goals and dreams?
To receive a free copy of an E-Book titled 'Franchise
Opportunity - Making The Right Decision' by Dennis Schooley,
email that request to corp@schooleymitchell.com.
About the author:
Dennis Schooley is the Founder of Schooley Mitchell Telecom
Consultants, a Professional Services Franchise Company. He
writes for publication, as well as for
schooleymitchell.blogging.com and franchises.blogging.com, in
the subject areas of Franchising, and Technology for the Layman.
http://www.schooleymitchell.com, 888-311-6477,
dschooley@schooleymitchell.com.
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