Franchise opportunity - Questions to ask the franchisor - Franchisor's qualification system

This article is brought to you by Dennis Schooley.

Finding The Right Franchise

Whether it’s hamburgers, pizza, telecom, coffee, Internet, muffler parts, or seniors’ services, there are Franchise opportunities available to evaluate. There are great Franchise systems, good Franchise systems, and bad Franchise systems. The challenge is to ask the right questions to find the right system that will fit your goals and dreams. The key is to ask the questions – and listen closely to the responses. Only then can you determine if the Franchise opportunity is the right fit for you. So whether it’s food services like burgers or coffee, professional services like telecom or IT, or manual services like cleaning or oil changes, ask the questions and record the answers.

Franchisor’s Qualification System

One of the initial things you should strive to understand is the level of development that the Franchisor’s Candidate qualification system has reached. Your first reaction to that might be ‘Why do I care about a Franchise Qualification system – I only care if I get a Franchise or not?’ I would suggest that you should care a great deal.

After all, if the Franchise Candidate qualification system hasn’t been well developed, it may be a reflection on the business of the Franchise itself. The most important asset of any Franchise system will be its people, including both Franchisees, and Franchisor staff. Almost all companies will confirm that to be the case. They say it even if they don’t believe it. They say it even if they don’t actually put systems in place to ensure they add the best people, and nurture their development over time. So how do you determine if the statement matches the execution?

If people are the most important asset, it would follow that the system of finding, qualifying, and granting Franchises to the best Franchisees would be a well thought out and well developed system. If there is no formal step-by-step system to provide information to both parties then it may be an indicator that there is something amiss.

A good system will be able to provide you regular information to help you make an informed business decision about joining as a Franchisee. It should also provide the Franchisor with information about you to help them make an informed decision as well. That decision should be whether you qualify as someone they can describe as one on their ‘most important assets’.

If the system doesn’t allow for a step-by-step, give and take, system of information flow then perhaps the other business systems within the Franchise aren’t as well developed as represented either. The information system shouldn’t be so fast that you are overloaded, but it should be steady enough that you can continue to assess, and deliver information, at a pace that makes sense for both parties.

If the system is too fast, for example if you are given Disclosure Documents within the first week of the due diligence process before many other things are assessed, I would suggest there is something wrong. To rush is to err. On the other hand, if the system is too slow, you won’t get a true flavor for the company because of the sporadic nature of the flow. Culture is important, and a steady flow of data will give you a better feel for the culture of the business than trading information every three weeks for a six-month period. If you are not looking to make a decision with 30 to 120 days, I would suggest that you wait until you are to that point before you engage fully in a Franchise Qualification system. That doesn’t mean that you need to be in business in that timeframe, just that you would like to make a decision in that timeframe.

Some systems will include a step-by-step system where you will receive information from the Franchisor, and then you will be required to provide some information to them. Once you provide the information, then the Franchisor will send you additional data to help you gain more intimate knowledge…and so on. The reason for that type of system, which I would judge to be ideal, is that each of you is illustrating commitment to the process. This is an important factor for the Franchisor to determine because it is a great indicator to them that you will be able to follow and use a good system to your advantage. That’s what Franchising is all about. The Franchisor has invested a significant amount of time and money to develop a proven system that is designed to earn all stakeholders a maximum return. Therefore the Franchisor must determine that each new Franchisee is willing and able to follow a good system. What better place to start than the basic evaluation system.

In today’s world, that system should use various media to communicate with you including email, telephone, mail or courier, Internet, in person etc. Again, this will demonstrate the Franchisor’s use of current technologies and methods to really get to know you, and to stay current in an ever-changing global environment.

If the Franchisor does not have a good step-by-step information flow and due diligence system then that alarm bell in your head should go off.

To receive a free copy of an E-Book titled ‘Franchise Opportunity – Making The Right Decision’ by Dennis Schooley, email that request to corp@schooleymitchell.com.

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