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Itís the Franchise Stupid


Itís important that franchisors and franchise candidates focus attention on the basic franchise operation and not get sidetracked into other areas.

Many of us can recall the phrase "It's the economy, stupid" which was introduced by political strategist James Carville during Bill Clinton's successful 1992 presidential campaign. It was used to keep campaign workers on message during the 1992 election won by Clinton. The words caused me to consider how franchisors and franchise candidates often conduct themselves during the franchising process.

For example, certain franchisors use their discovery day to present a lineup of franchisor resources with more emphasis on what they do rather than what makes a franchisee successful. This is not to say that franchisor support and training arenít important. This approach can prompt some franchise candidates to focus less on the franchise operation and more on these other activities.  For their part prospective franchisees need to conduct a thorough evaluation that includes using professional advisors. Further, the candidate needs to have a clear understanding of how the franchise operates especially in terms of marketing and operations.

Here are Five Areas that Should Receive Focus by both Parties:

  1. The profitability of the franchise operation. This may require an Item 19 disclosure or at the very least providing cost and expense data to a candidate that can enable them to do a break-even calculation. If necessary have them sign an NDA.
  2. What attributes or traits do their successful franchisees possess? What are the skills necessary to successfully operate this franchise?
  3. What has been done to enhance the franchise program? New procedures, products, services and technology?
  4. How does the franchisor respond to requests for assistance and how quickly?
  5. Identify the key fundamentals and process needed to operate the franchise. Are there steps to success that each franchisee should follow?

Franchisors and prospective franchisees should maintain their focus on the operation of the franchise. Although there are other important aspects of a franchise evaluation, attention should remain on the franchise and the keys to success. After all, itís the franchise stupid.

© 2011 FranchiseKnowHow, LLC

Ed Teixeira is the President of FranchiseKnowHow, LLC. He can be reached at franchiseknowhow@gmail.com


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