Franchisee checklist - assessing the franchisor
Franchisee checklist - assessing the franchisor
1. Is the franchisor soundly financed? Ask to see audited financial records for three years.
2. What is the franchisor's credit rating?
3. Who are the franchisor's accountants, bankers and lawyers?
4. Is the franchisor a subsidiary of another company and if so whom? Is the parent company soundly financed? Ask to see their accounts too.
5. Does the franchisor have associate companies? If yes, who are they and what is the relationship between them and the franchisor?
6. Does either the parent company or any associate operate franchises? If so, would they be in competition with you?
The company's history and experience
7. How long has the franchisor been in this type of business?
8. What business experience and qualifications have the franchise's directors and managers?
9. Have any of the directors or managers ever gone bankrupt?
10. Have they or the company been involved in any litigation or court judgements?
The franchise system
11. Is the franchise operation a success?
12. Does the franchisor still run any units him/herself? If so, how many?
13. Are they buy-backs or failed franchises or is the franchisor keeping prime sites him/herself?
14. How many franchise outlets does the franchisor currently have? How many are in your country or state? What has the trend been in recent years?
Past and future of the franchise system
15. When did the franchisor start franchising?
16. How long has his/her pilot operation been running?
17. Has he/she had any franchise failures or franchisee departures? If so, how many, and why did they fail?
18. How many franchise owner-operated outlets does he/she intend having in the future? Where will they be and over what time-scale will they be developed?
19. What innovations has the franchisor introduced since starting franchising? What plans does he/she have for the future?
Other questions
20. How particular is the franchisor when selecting his/her franchisees? What selection criteria does he/she use?
21. Can you interview some of the existing franchisees?
Too many people rush into franchise agreements without carrying out a thorough investigation into the financial status of the franchisor. Many franchisees trading successfully in their local area find themselves in difficulty if/when the franchisor goes into liquidation. Be wary of franchisors who are not forthcoming with up-to-date financial information.
Franchisee checklist assessing the franchisor - To learn more about this author, visit Diarmuid Kieran's Website.
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The franchisor's company
1. Is the franchisor soundly financed? Ask to see audited financial records for three years.
2. What is the franchisor's credit rating?
3. Who are the franchisor's accountants, bankers and lawyers?
4. Is the franchisor a subsidiary of another company and if so whom? Is the parent company soundly financed? Ask to see their accounts too.
5. Does the franchisor have associate companies? If yes, who are they and what is the relationship between them and the franchisor?
6. Does either the parent company or any associate operate franchises? If so, would they be in competition with you?
The company's history and experience
7. How long has the franchisor been in this type of business?
8. What business experience and qualifications have the franchise's directors and managers?
9. Have any of the directors or managers ever gone bankrupt?
10. Have they or the company been involved in any litigation or court judgements?
The franchise system
11. Is the franchise operation a success?
12. Does the franchisor still run any units him/herself? If so, how many?
13. Are they buy-backs or failed franchises or is the franchisor keeping prime sites him/herself?
14. How many franchise outlets does the franchisor currently have? How many are in your country or state? What has the trend been in recent years?
Past and future of the franchise system
15. When did the franchisor start franchising?
16. How long has his/her pilot operation been running?
17. Has he/she had any franchise failures or franchisee departures? If so, how many, and why did they fail?
18. How many franchise owner-operated outlets does he/she intend having in the future? Where will they be and over what time-scale will they be developed?
19. What innovations has the franchisor introduced since starting franchising? What plans does he/she have for the future?
Other questions
20. How particular is the franchisor when selecting his/her franchisees? What selection criteria does he/she use?
21. Can you interview some of the existing franchisees?
Too many people rush into franchise agreements without carrying out a thorough investigation into the financial status of the franchisor. Many franchisees trading successfully in their local area find themselves in difficulty if/when the franchisor goes into liquidation. Be wary of franchisors who are not forthcoming with up-to-date financial information.
Franchisee checklist assessing the franchisor - To learn more about this author, visit Diarmuid Kieran's Website.
Like this article? Share it with your friends
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Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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