Is the franchise system I am buying into a viable one?
How do I know that the franchise system I am buying into is viable in the medium to long term?
So your about to be a franchisee? Well let’s hope that you have evaluated the franchise system and satisfied all the key areas that will keep you dancing in the system you have chosen. This decision will have a large impact on the lives of you and all members of your family.
Whether it is a mobile domestic service such as Lawn Mowing, Car Detailing, or a retail based business in a suburban or regional shopping centre, Business Development Alliance (BDA) recommends that you should conduct a detailed and thorough evaluation of that franchise to ensure that it is the best opportunity for you and your family.
According to BDA Director, Mark Fernandez, there are some key areas that franchisees should cover before buying into a franchise business opportunity.
- The Concept – is it proven?
- Consider the Franchisor’s Management Team
- The content of the Operations Manual should cover all the ‘day to day’ activities of running the business
- The Market – the organisations market share and competitor analysis
- The Future – what are the expansion and business plans?
- Franchise Agreement and Disclosure Documents – get expert advice from franchise advisors
- How experienced is the Franchisor? What's the track record of the franchise? What has the growth rate been for the past three years?
- Is the Franchisor financially sound? Can you check from the Disclosure Document? Can your accountant talk to theirs’?
- What are the growth and development plans for the next five years?
- Is any deposit that you pay to the Franchisor refundable?
- Does the Franchisor have enough experience within the organisation to provide worthwhile ongoing support?
- Is there sufficient advertising? Does the Franchisor contribute?
- Is training provided - initially and later? Who pays? How good is the training?
- Is there a uniform performance monitoring system? What are the arrangements for providing field support?
- How many outlets are there? How many are company-owned?
- How many failures have there been? Details?
- Can I contact existing Franchisees of my own choice?
- Are they a member of the FCA – Franchise Council of Australia