Information That Will Benefit Franchise Candidates and Franchisors
by Ed Teixeira
When selling a franchise the franchisor should provide the franchise
candidate with the information necessary for making an informed decision. On the
other hand, the franchise candidate should know what information they require
before making their decision. This article provides advice for both parties. When selling franchises, franchisors should provide prospective
franchisees information that pertains to all aspects of the franchise operation.
In addition, franchisor staff will be asked particular questions by the
candidate.
However, there is some information a franchisor may not provide and
questions that a franchise candidate may not ask. Whether or not this lack of
information can negatively impact the future success of a specific franchise is
unknown. My position is that the franchisor has an obligation to provide a
prospective franchisee as much information about the franchise opportunity as
possible, while complying with franchise disclosure regulations. The information
provided by a franchisor will help in the franchise sales process, while
educating the prospect regarding the franchise. The end result should be an
informed and intelligent decision by both parties pertaining to the possible
purchase of a franchise.
An important consideration regarding the decision to purchase a franchise is
based upon the ability of the new franchisee to effectively develop sales in his
or her market. Any additional information pertaining to the market will be of
benefit to both franchisor and franchise candidate.
The additional information should include the following:
The composition of the market including demographics, where the franchise
will be located. This information includes actual and potential revenues, number
of firms and any large or dominant players in the territory. The nature of the
competition and how the franchise can effectively meet the competition. Are
there certain critical success factors that relate to the successful firms in
the same industry segment? Try to use examples of firms that are leaders and
what sets them apart from the others. Credible and recent financial data and
statistics pertaining to the industry. U.S. Commerce Department reports are an
example. Key attributes of the franchise such as location and marketing
techniques needed to succeed.
This is information that a franchisor should provide to a prospective
franchisee. In some cases the franchisor may advise the candidate to gather some
of the information on their own. In any case, franchisors should include this
component as part of their franchise sales process. By following this approach
franchisors will be providing prospective franchisees the information that will
enable them to make a better decision regarding the franchise. The result can
benefit both parties.
© 2011 FranchiseKnowHow, LLC
Ed Teixeira is the President of
FranchiseKnowHow, LLC. He can be reached at
franchiseknowhow@gmail.com
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