FRANCHISE ADVICE
A lower-cost, lower-revenue franchise will probably be five years. You should be able to sell your franchise on, with the franchisor’s permission, or renew at the end of the term. Most franchisors renew without further cost other than professional fees, but it is important to know what your options are.
7. What are my revenue streams? You will be selling products or services for a price – ask for details of pricing, cost of materials, any head office charges surrounding the sale. Ask for details of competitors’ pricing – and do your own research. What other revenue streams are there – maybe you are selling a product and can offer an installation service, or a servicing agreement. Are all these revenue streams liable for the management service fee.
8. What marketing is carried out by Head Office for the benefit of the franchisees? Although you will be responsible for local marketing, and will need to set aside a percentage of your revenue for this, your franchisor should be conducting national campaigns to keep the company message fresh, appeal to likely customers, and generate business for both company- owned and franchised outlets. Some franchisors have a central marketing fund to which all franchisees contribute, some pay for central marketing from the management service fee.
9. Can I have a list of existing franchisees to talk to? If a franchisor freely offers a list and encourages you to talk to any franchisee then he is clearly proud of his network – even if he says he has one or two who are not representative of the whole network, then this is honest – but beware of the franchisor who will not give details or actively discourages you from contacting existing franchisees.
10. Tell me about your competitors… The franchisor should know his competitors, where they are in terms of price comparisons, service delivery, and, particularly, activity on the area or territory you are looking at. What
22
"A good and well-organised franchisor will have arrangements with the major banks and maybe asset finance lenders to help you raise the necessary finance"
is the biggest competitive threat and what is the biggest opportunity? Are there any changes on the horizon to the market or the franchise offering within that market? What impact will any changes have on the company?
In the course of your meeting you will also cover a lot of other subjects, but these are my top ten to ensure that you are buying into a genuine successful business. And finally – ask for a copy of the
franchise agreement, management accounts from a typical anonymous franchisee, and sight of the Franchisor’s last accounts –You will almost certainly have to sign a Non-Disclosure Agreement to be given this confidential information or you may have to arrange for these to be sent to your accountant on a confidential basis.
RICHARD LANGRICK is a franchise consultant for Ashtons Franchise Consulting
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114
