Franchisees Must Choose Wisely

Choosing a franchise in which to invest is probably the most important decision a franchisee will make in her or his career as a storeowner, so it pays …

Choosing a franchise in which to invest is probably the most important decision a franchisee will make in her or his career as a storeowner, so it pays to be informed before taking that first step. Experts say there are eight things a prospective franchisee can do to increase the odds of success at the outset. A few of these include ensuring the franchise deals in a quality product or service, knowing the franchise has an established market, establishing that the business has strong sales and earnings, and reviewing the company’s overall business and marketing plans for quality. For more on this continue reading the following article from Blue MauMau.

If you’ve already started your franchise search, then you know that there are a lot of franchisors on the market looking for new franchisees. Prospective franchisees must be exceedingly careful when searching for and evaluating franchise opportunities. There are many low-caliber franchises out there with slick websites and big promises that can easily sweep an unwary prospect right off their feet and right into a bad business.

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The franchise you choose will be the biggest decision you make as a franchisee and will play a major role in whether you are financially successful and professionally satisfied. That’s why the AAFD has developed its list of Eight Things to Look For in a Franchise Opportunity. This is our list of the top qualities you should look for in any franchise you’re considering. If even a single quality is missing, consider that a big red flag.

  1. Quality Products and Services: Select a franchise that is primarily interested in distributing quality products and services to customers. Although this rule may seem obvious, many (if not most) franchising companies are primarily interested in selling franchises and are less concerned with the quality of the products and services they are theoretically in the business of selling.

  2. Franchising as its Primary Distribution Method: Your franchise company should be dedicated to franchising as its primary mechanism of product and service distribution. Be wary of franchisors with a large number of company-owned stores, or that distribute its products through other channels, such as supermarkets or discount stores.

  3. Established Market: Your franchisor should produce and market quality goods and services for which there is an established market demand. The value of franchising emanates from the value of the franchisor. Too many prospective franchisees cannot qualify for a widely-recognized franchise and settle for a lesser known system thinking the franchise concept is more important than the product or trade name.

  4. A Well Established Trade Name: If you are looking at a franchise that doesn’t offer an established brand, you must be able to justify the additional cost of a franchise based upon measurable experience, expertise, or systems that offset the lack of an established market.

  5. Strong Business and Marketing Plans: Evaluate your franchisor’s business plan and marketing system. A well-established, well-designed marketing system includes substantial franchisee training and overall support.

  6. Good Franchisee Relationship: Your franchisor should have good relationships with its franchisees. Likewise, the franchisees should have a strong franchisee organization, such as an AAFD Chapter, which has negotiating leverage with the franchising company. Strong franchisee associations will pave the way toward successful and cooperative franchising systems.

  7. Strong Sales and Earnings Data: Only consider franchising companies that provide sales and earnings data which demonstrate an attractive return on your investment. Don’t believe franchisors who claim that they are forbidden by law to provide earning projections and evidence of actual performance. On the contrary, all state and federal laws regulating franchising actually encourage franchisors to provide this information to prospective franchisees.

  8. Support of Fair Franchising Standards: Select a franchisor that supports the AAFD’s Fair Franchising Standards and respects the Franchisee Bill of Rights of the AAFD.

This article was republished with permission from Blue MauMau.


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