You’ve decided that becoming a franchisee would be an excellent path to take on your way to business success. But there are many franchise systems to choose from, making it harder to know which one will best help you to arrive at your destination. As you research your options, what are the signs of successful franchise system you should look for?
“The success of a franchise system can be influence by a number of factors,” says Lorraine McLachlan, Canadian Franchise Association President and CEO, “so you will want to explore all aspects of the company as part of a proper due diligence process.”
Start by asking if the system is a CFA member. Members adhere to the Association’s Code of Ethics, which outlines best practices for, among other things, disclosure of financial records and projections. The franchisor should provide you with full and accurate written disclosure about the franchise system in a timely fashion.
Look at the core of the franchise system’s concept: the products or services they offer. The concept should be unique with a clearly defined market. There must be consistency from location to location, an important hallmark of the franchise business model.
Ask how they select franchisees to operate their locations. “Just as you are investigating a system, the franchisor should be conducting their own due diligence about potential franchisees. They should be keen on ensuring any relationship entered into will be mutually beneficial,” McLachlan says. Beware if you feel hurried or pressured into a decision – a good franchise system will want to take time to be certain that any agreements are entered into are in both parties’ best interests.
Investigate the level of support, training and communication offered to the franchise system’s franchisees. You should receive information about this from the franchisor but a great way to find out more is to speak with some of the system’s current franchisees. Ask them about what their initial and ongoing support and training entailed and their satisfaction with the amount of communication they have with head office. This will give you a better idea of what to expect.