Failure to identify the reasons for franchisee failures
Talks with former franchise owners can be very revealing. They certainly are not going to hold back in their criticism or praise of the franchisor. It may surprise you, but a lot of failed franchisees will tell you that the franchisor was not at fault. The blame lies entirely with them. Then they are those who will vilify the franchisor. Some of the complaints may be valid. Query the franchisor on its position and what it considers are the real reasons for the failures. You'll need to get a list from the franchisor. Don't be bashful to ask for one. If everything is open and above board it should not be a problem.
Make sure you are dealing with pros in the franchising industry. How experienced is the franchisor? The disclosure document and existing owners can tell you a lot. It's difficult to make an unbiased appraisal through the eyes of a franchisor alone. A company-owned and operated unit is not the best place to look for flaws. You need some other opinions. Existing owners are the best source. They are not going to shield a franchisor. If they are unhappy, you'll hear about it and probably get some advice to stay away from that franchisor.
Is the franchisor strong financially and does it enjoy a solid reputation in its business area?
Get a list of references, including suppliers, and talk with them. You may also want to speak to competitors to see what they think of the franchisor.
Talks with former franchise owners can be very revealing. They certainly are not going to hold back in their criticism or praise of the franchisor. It may surprise you, but a lot of failed franchisees will tell you that the franchisor was not at fault. The blame lies entirely with them. Then they are those who will vilify the franchisor. Some of the complaints may be valid. Query the franchisor on its position and what it considers are the real reasons for the failures. You'll need to get a list from the franchisor. Don't be bashful to ask for one. If everything is open and above board it should not be a problem.
Make sure you are dealing with pros in the franchising industry. How experienced is the franchisor? The disclosure document and existing owners can tell you a lot. It's difficult to make an unbiased appraisal through the eyes of a franchisor alone. A company-owned and operated unit is not the best place to look for flaws. You need some other opinions. Existing owners are the best source. They are not going to shield a franchisor. If they are unhappy, you'll hear about it and probably get some advice to stay away from that franchisor.
Is the franchisor strong financially and does it enjoy a solid reputation in its business area?
Get a list of references, including suppliers, and talk with them. You may also want to speak to competitors to see what they think of the franchisor.
Labels: Franchise Opportunity
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