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Evaluating the Franchisor

by Ed Teixeira

One of the critical steps when purchasing a franchise is to evaluate the franchisor.

Before deciding to invest in a franchise itís important to evaluate all aspects of the franchise program. This includes evaluating the franchisor which includes how they administer the franchise program and whether they deliver as promised. One of the most effective ways to evaluate a franchisor is by obtaining feedback from current and former franchisees. However, there is another way to conduct a franchisor evaluation, which can complement the feedback obtained from the franchisees.

Five Ways to Evaluate the Franchisor:

1. How does the franchisor conduct the franchise sales process?

How a franchisor conducts the sale of new franchises can say a lot about the franchisor.

  • Was your request for franchise information processed on a timely basis? If you had to wait more than a week to receive an acknowledgement of your interest in the franchise or franchise information, it could indicate a lack of staffing by the franchisor. Most franchisors have a digital information packet which can be emailed to qualified candidates.
  • Do your e-mails or calls to the franchisor sales staff generate a prompt response?
  • If the franchise representative is taking an aggressive sales approach, it could be a sign that the franchisor is trying to promote fast growth.

2. Is the franchisor representative responsive to your emails and telephone calls?

  • In a well managed and efficient franchise operation, franchisor staff is responsive and timely in their response to requests.
  • If a telephone call or email fails to result in a response within 2-3 days, it could signal a lack of leadership or professionalism on the part of the franchisor and certain staff

3. Are your questions being answered?

When pursuing a franchise opportunity, itís common for a franchise candidate to have a number of questions. A prompt response to a question or request for information by franchisorís staff indicates that the franchise operation is well organized. This doesnít mean that youíll receive the answer you want but does indicate a well managed organization.

4. Discovery Day

Virtually every franchisor has a Discovery Day which is an opportunity to evaluate the franchisee and respond to any issues or questions that hadnít been raised before. Be aware of the following items which can be an indication of franchisor performance.

  • Did you receive a Discovery Day agenda prior to the meeting?
  • Did you receive guidance pertaining to travel and accommodations for your visit?
  • Will you be meeting with a cross section of the franchisor organization?
  • Was the Discovery Day process professional or was it very sales orientated?

5. The final and important question

An important but somewhat difficult area to evaluate is the franchisorís corporate culture. After interacting with the franchisorís staff for countless weeks, one should gain an impression of how it is to work with the franchisor. A franchise relationship can last many years and there has to be compatibility between both parties. If there is any apprehension on the part of the franchise candidate, then it may be best to walk away. Although identifying the corporate culture can be challenging, itís a necessary step in the franchise evaluation process.

Combining franchisee feedback with an evaluation of the franchisor will provide a franchise candidate the opportunity to make a more intelligent evaluation of a franchise opportunity.

 

© 2015 FranchiseKnowHow, LLC

Ed Teixeira is the President of FranchiseKnowHow.com and Chief Operating Officer, FranchiseGrade.com. He is a former franchise executive and franchisee. He can be contacted at 631-246-5782 or at  franchiseknowhow@gmail.com

 

 

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