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Franchisors Must Document Everything

Written by: Ken Hollowell

Article Overview: Ken Hollowell discusses the important of documenting everything within the franchise network.

Franchisors Must Document Everything

DOCUMENT EVERYTHING

Due to the over regulation in the Franchising Industry and the litigation it is important to keep impeccable records. From the first phone call, email to the signing of the franchise agreement everything should be documented. Below is a checklist we created for our franchise company and one I wish you would consider when creating your own. I recommend you copy this article and then modify it to fit your business model.

You must understand that without proper documentation you might find your company entangled in meaningless and wasteful litigation instead of spending the time on expanding your market share and brand name. Below is our sample checklist we use at the Car Wash Guys, you may have this and modify it at will, I dismiss any copyrights to you. Now remember our Franchise is a specialty type business, mobile car wash and the franchisee must be in excellent physical condition, where as your business model may wish to screen for other things.

1. Telephone Interview with Founder or Designated Person. (Minimum 30 min.) Friendly conversation; Lots of listening. Notes will be taken on "Pre-Screening Phone Worksheet". This worksheet will be kept in a file if prospective franchisee is qualified. A resume will be asked for at this point. It should be faxed or mailed to headquarters. If none is available, one will be created from the phone interview.

2. Resume Is Reviewed and compared to notes from phone interview for consistency. If it is acceptable, then we proceed. If it is not, process ends here. If, during the phone interview we created a resume for the prospective franchisee, it will be mailed to them so they can use it in their next interview. We will also send a copy to A Contract Employment Agency, a company with whom we network. They in turn will send us qualified prospects.

3. Timed Run is performed by prospective franchisee. Designated Person will time prospective franchisee on a running track. He or she must run one mile in under 7:30 minutes. "Timed Run Form" will be signed and dated by both prospective franchisee and Designated Person. If , He or she fails test, they will be given a workout schedule based on their actual time. They may try again in two weeks, or when they feel ready.

4. Ride Along with a crew. Two crews will be assigned to a new prospective franchisee. After the run, on the same day, prospective franchisee will spend all day helping a crew. Second Ride Along will occur the following day with a different crew to assure that the prospective franchisee understands how much work there is.

5. File Is Created in prospective franchisee's name. Included are: Pre-Screening Phone Worksheet, Resume, Timed Run Form, Ride Along with Summaries from Crews. This checklist will be paper clipped to front of file.

6. Letter Of Intent is asked for from prospective franchisee. When received it is put in file and "Request to Join Team" form is sent out.

7. Request To Join Team Form is mailed to prospective franchisee. It must be mailed back in 15 days or prospective franchisee must go back and work on a third crew for one day. Hesitation means they are not quite sure yet or they falsified information.

8. Reviewing Of Request To Join Team Form will be screened by two Ride Along Crew managers and three other franchisees or independent contractors, a woman not associated with our company, a Quality Control consultant, a customer or the founder. All people Involved get one vote except Founder; he gets three. (Unless there is a third Ride Along Crew, then he gets only two). Prospective Franchisee must have 2/3rds. (12 Total, 8 to win!)

9. Request To Join Team Form Is Faxed to our favorite leasing company if they will be borrowing to buy the franchise or Wells Fargo Bank where the credit card processing will be done. Leasing company will notify us if prospective franchisee is credit worthy and fax us a TRW print out. Wells Fargo will do a background check and see if prospective franchisee qualifies for a merchant account.

10. Extensive Background Check will be done by a contracted private investigation firm. Check will include: FBI Report, Court Records, etc. He/she must pass or other arrangements must be made.

11. Meet With Prospective Franchisee - This will be the first official one on one meeting. Present at this meeting will be prospective franchisee, and his advisors, spouse, parents, investors, etc. Also present: Founder or Designated Person and eight other associates, members of the Executive Committee and franchisees or independent contractors.

12. Vote On Prospective Franchisee to determine if prospective franchisee is good enough. All information will be on the table, literally. On the table will be: Credit Report, Wells Fargo Approval Application, Leasing Company Tentative Approval, FBI Report, Court Records, Letter of Intent, Etc. He/she will be able to defend themselves against hearsay or false information on collected documents. Other items on table will be Pre-Screening Phone Worksheet, Resume, Timed Run Form, Ride Along Summaries and of course, The Request To Join Our Team Document. All nine people vote; Anyone absent will have their vote replaced by Founder or Designated Person. (2/3rds to win)

13. Approval will initiate a distribution of agreements for the prospective franchisee to sign:

• Franchise Agreement
• Franchise Offering Circular
• Leasing Application for Equipment
• Cellular Agreement
• Supply Ordering Agreement
• Non-Disclosure Agreement
• Bank Account Forms & Merchant Account Agreement
• Non-Competition Of Other Franchisees Promise
• Fictious Name Statement
• Document Receipt Form

14. Returning of Forms - The prospective franchisee will return signed forms. No payment may be taken for 2 weeks. We will use 14 days to be safe. He/she may be placed in training until then.

Related Articles
  How Can You Get Out of a Franchise?
  Franchisors as a Source of Financing
  WHAT YOU NEED TO KNOW ABOUT BUYING A FRANCHISE
  For Franchise Buyers: What the UFOC Tells You
  Franchise Financial Information

Article Tags: franchise consultant, ken hollowell, our business, profran consultants



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Re: Have you tried Mozilla Firefox 3.0.1 - I use it. it is probably the fastest and is great for organizing my online business information, but the pictures load slower than Internet Explorer. Also it becomes irritating to open links in Word Document with FireFox. Hope it helps.
Re: Have you tried Mozilla Firefox 3.0.1 - [quote="orxan":1ys0lz55]I use it. it is probably the fastest and is great for organizing my online business information, but the pictures load slower than Internet Explorer. Also it becomes irritating to open links in Word Document with FireFox. Hope it helps.[/quote:1ys0lz55] Thanks Orxan, I did not notice the part of pictures loading between IE and Firefox
Re: Franchise Surveys - Another good tool to researching a franchise is to speak with their existing franchisees. This contact information is included in most Franchise Disclosure Documents. In order to get a Franchise Disclosure Document or FDD as it is often referred to, you will have to complete a basic franchise application. The franchisor will then usually provide you with the FDD at that time. Included in that book of information is a list of the existing franchisees, the contract, the investment information etc... This information is required by Federal Law to be disclosed to your prior to making a purchase. So be sure to do your research and start with the Franchise Documents to get the initial information.
Think like an Association - Hey Sebastian, Maybe you could try thinking like an Association... I would study the structure or formats used by other Associations. What are they doing to add value for their members? The BBB plays a monitoring role for consumers by gathering data about business' that are behaving badly. And they're pretty successful at it too. Maybe you can offer a 'Platinum Program' that franchisors buy into. Accredited members only. Criteria could be strict: 1. Age (stability): 10+ years 2. Satisfied franchisees: 85% + satisfaction 3. Size (stability again): 250 units 4. Strong profits 5. Great management -Maybe a 'Gold Program' for those Franchisors that aren't quite at that level, but can strive to reach it... -Top 100, 500, 1000 Listing for qualified members... maybe a slap at Entrepreneur.com and their biased top 10 lists... -Maybe act as a monitor like BBB? -Maybe team up with FranSurvey OR do something similar for each member (not sure about Fransurvey's rep, but I like the concept) There's so much discontent within the franchising arena that I think if you were part of the solution, then you could create a win/win with your Association. The only downside is that this power can get abused if there aren't good checks and balances within the association.
Re: Kevin's Case Study #6 - Marketing an information resource? - [quote="Evan":3ndb7usp]Hi Sebastien, I'm wondering about two things: 1) What is your current revenue model? 2) Why would franchise owners choose to sign up with you over the lead generation companies? Is there some kind of quality control certification that you could award them to say that they are a World Franchising certified franchise? I'm not clear on what benefits a company seeking to franchise would really get from your site beyond the lead generation component.[/quote:3ndb7usp] Hello Evan, 1. We currently make money from what you may call lead generation. Franchisors pay us a fee to be on our websites and in our top seller franchise guides. We also generate money from other avenue; mostly by selling hard-to-get information about franchising (UFOCs, etc...) 2. That's exactly what I'm trying to answer.... I want to get away from the lead generation perception. I want to be seen as a good information resource, which we are. I have started to take the association angle and I am now looking to provide great benefits to our Members (used to be called clients). I think I'm on the right way. I made a lot of progress the last couple days.


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