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Franchisor Best Practices

Written by: Peter Macrae Dillon

Article Overview: Looking to operate an excellent franchise system? Franchisors should look to implement as many of these "best practices" as possible. peter macrae dillon Siskinds franchise franchisor franchising lawyer attorney Toronto Ontario Canada www.franchiselaw.ca

Franchisor Best Practices

FRANCHISOR BEST PRACTICES

These practices have been identified as "best practices" for which franchisors should strive.

These include:

A Franchise Selection Process:

1 Pre-sale steps taken to match a qualified candidate to the system to ensure that the needs and expectations of both parties are met.

2 Franchisees are adequately informed to ensure that their financial expectations are consistent with the experience they are likely to have.

3 The franchisor strongly encourages the franchisee to get independent legal and accounting advice and provides a reasonable time period during the sales process for all parties to review the offering.

B Disclosure Policy:

1 Franchisees receive a disclosure document.

2 The disclosure document is updated immediately upon any material change.

C Franchise Information Package:

1 Sufficient documented material is provided to every franchisee prospect upon which an informed decision can be made.

2 Extensive assistance is provided for selection of site, lease negotiation and financing.

D Initial and Ongoing Training:

1 Franchisees receive the benefit of a comprehensive training program.

2 Franchisees receive comprehensive and up to date operating manuals that prepare them for all aspects of the business including day-to-day operations, marketing, business development and administration.

3 Franchisees receiving ongoing training to keep them current on industry trends and to better enhance their skills and competitiveness in the marketplace.

4 Franchisees receive the benefit of ongoing support.

5 Franchisees receive the benefit of assistance with “A Grand Opening”.

6 Franchisees receive the benefit of assistance immediately following start-up.

7 Franchisees receive the benefit of refresher courses.

E Field Support/Network Communication:

1 Franchisor provides effective measures to preserve the integrity of the system.

2 Franchisor provides mechanisms for franchisee input and resolution of concerns.

3 Franchisor provides effective store inspections and evaluations.

4 Franchisor provides creation and analysis of budgets and cash flow projections.

5 Franchisor provides system-wide communications.

6 Franchisor provides comprehensive programs for launching new products.

7 Franchisor receives franchisee input into programs and concept development, which can include participation in duly selected franchise advisory councils, special committees and associations.

8 Franchisor has developed and utilizes specific procedures in order to provide administrative, financial and planning support prior to store opening.

9 The franchisor meets the franchisee’s expectations by providing reasonable, attainable financial disclosure based on actual performance of the existing locations, providing disclosure of a realistic forecast for reaching financial break-even.

F Marketing:

1 Franchisor creates and provides marketing strategies and materials that are effective in all geographical regions to assist the Franchisee in achieving profitability and increasing market share. Franchisees must have input along with full disclosure of the use of advertising funds.

G Problem Solving:

1 Franchisor pinpoints trouble through early detection systems.

2 Franchisor provides special assistance for under-performing locations or those franchisees experiencing a personal crisis.

3 Franchisor deals with disagreements between franchisor and franchisee on a good faith basis.

4 Franchisor deals with the disability or death of a franchisee on a compassionate basis.

5 Franchisor provides assistance with financing and renegotiation of loans.

6 Franchisor provides assistance in the renegotiation of leases.

H Concept viability, which may include research and development, innovation, competitive analysis and strategic growth:

1 Franchisor takes innovative steps on an ongoing basis to keep the system concept viable including research and development, technical and marketing improvements, competitive analysis and well-defined growth strategies.

2 Franchisor conducts through market research, analysis in order to determine the viability of each franchised location.

I Corporate Culture:

1 Franchisor puts special emphasis into cultivating and maintaining a “corporate culture” that embodies a spirit of integrity, support, compassion and fair dealing towards their Franchisees.

J Reward and Recognition Programs:

1 Franchisees are recognized and rewarded for outstanding achievements in categories that include sales achievements, quality of operations, and others, on a periodical and ongoing basis.

Related Articles
  Qualities to Look for in a Franchisor
  The Ten Golden Rules
  Franchisee checklist - assessing the franchisor
  Evaluate Complaints Against Franchisors Before Signing The Agreement
  Before you Buy: How to Interview Franchisees to Get the Real Scoop

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Related Forum Posts
re: franchising mistakes - Great list Michele. I would expand on the first point re: due diligence, to call and speak with a number of existing franchisees. In my experience, I am amazed at *some* folks lack of due diligence... It's as if they are set on the concept, and have no desire to hear other opinions. While you may get a list of references from the Franchisor, it wouldn't hurt to call a few franchisees that are not on their approved list. You may be surprised at what you learn. I can think of a handful of franchise offerings (very recognizable brands) that, upon deeper research, would reveal a darker side that would send me - and any other sane entrepreneur - running in the opposite direction. Yet there are people still buying into the franchise concept with a glazed look in their eyes.


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