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What Do Franchisors Look For in Potential Franchisees?

Guest post by: Anne Barr

Article Overview: There are numerous sources that give in depth descriptions of what you should look for when evaluating which franchise you want to purchase. Just because you find what you believe to be your perfect fit in franchising, does not automatically mean you will be approved for that franchise. Franchisors carefully evaluate all potential franchisees. They have their brand recognition and success rate to protect. If they let people into their franchise system that do not follow the rules and are unsuccessful, it can severely damage their image to consumers, potential franchisees, and funding sources.

What Do Franchisors Look For in Potential Franchisees?

There are numerous sources that give in depth descriptions of what you should look for when evaluating which franchise you want to purchase. Just because you find what you believe to be your perfect fit in franchising, does not automatically mean you will be approved for that franchise. Franchisors carefully evaluate all potential franchisees. They have their brand recognition and success rate to protect. If they let people into their franchise system that do not follow the rules and are unsuccessful, it can severely damage their image to consumers, potential franchisees, and funding sources.

A franchisor is looking for people with an entrepreneurial spirit, but they also need people that are willing to follow a system. People that are too entrepreneurial have a difficult time following the system because they tend to think that their way is better than the proven systems the franchise has in place.

How motivated is the applicant? Franchisors want to make sure the franchisee will be motivated and work at making the franchise successful. You don't just give the franchisor some money and become instantly successful - it takes a lot of hard work to make a franchise profitable.

The franchisor is going to evaluate each potential franchisee's financial situation. A franchisee will need to have enough money and/or sufficient credit to be able to secure outside financing to fund the franchise fee, start up costs and at least six months of living expenses. It is a waste of everyone's time to go through the evaluation process if the potential franchisee will be unable to fund the transaction.

It is important to keep in mind that the franchisor is evaluating you as you are evaluating the franchise system.

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Article Tags: franchise brand, franchise opportunities, franchise system



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Information about doing franchise business in China - CHINA’S FRANCHISE LEGAL SYSTEM Introduction Franchises has a history of more than one hundred years in foreign countries, now it has developed to be a mature business mode, and it is widely used in many countries, especially the developed ones. Recently, franchises has been developing fast in China, covering more than sixty industries and trades such as catering, retailing, clothes-washing, indoor decorations and gym. However, the market order of franchises is chaotic in some industries and areas. There are also some illegal and criminal activities under the guise of franchises. Under such circumstances, several important laws have been promulgated to regulate the commercial franchising activities. 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Information Disclosure Requirements and Regulation on Franchisors Information disclosure system is the core system of franchising. The laws provides that the franchisors shall establish and implement a perfect information disclosure system, and provide the relevant information and franchising contracts in written form, at least thirty days before execution of franchising contracts. It also sets out the specific provisions on the information which shall be provided by franchisors, including the basic conditions and commercial reputation records of the franchisors and their legal representatives, business sources owned by franchisors, abilities of franchisors to provide service to franchisees and management and supervision on business of franchisees, franchisee fees and the payments, and budgets for investment in franchising shops. To the franchisors that violate these provisions, the authorities in charge of commerce will order them to rectify, charge penalties and make public statements. Archival Filing and Public Announcement Systems To protect the franchisees’ lawful rights and interests, considering the asymmetric information between franchisors and franchisees, in addition to intensifying information disclosure requirements and regulating the activities of franchisors, the Measures also bring in the archival filing and public announcement systems. The Measures provides that the franchisors shall make a filing with the commerce administrative department within 15 days after the execution of franchising contracts for the first time. Anyone who intends to engage in any commercial franchise activities within a province, autonomous region, or municipality directly under the Central Government shall go through the archival filing formalities in the commerce administrative department of the people’s government of the province, autonomous region, or municipality directly under the Central Government where the franchisors are located. Anyone who intends to engage in any commercial franchise activities beyond a province, autonomous region, or municipality directly under the Central Government shall go through archival filing formalities in the commerce administrative department of the State Council. Any franchisor having been engaging in franchise activities before May 1, 2007 shall apply for archival filing at the commercial administrative department. The Ministry of Commerce has established the national network for archival filing work relating to commercial franchise. 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