To become an attractive franchise
Signing a franchise agreement can be taken up as ordinary transaction. Franchisor is a seller and franchisee is a buyer. Franchisor is the owner of the product and tries to make his offer as attractive as possible. But an interesting peculiarity of franchise transaction makes it different from the ordinary one. The relations between two sides do not end after the agreement has been signed. Franchisor continues providing training and other kinds of support. So I need to make a short conclusion: franchisor also lays down his demands toward potential partner. And if you want to be an attractive franchisee you need to think this over too.
At first I think it’s necessary to distinguish the differences between franchisor’s requirements and the things he wants you to provide before signing the agreement. The first group of factors (requirements) usually includes the following:
1. Money (for sure it’s the first). Franchisor needs at least to cover his expenses.
2. Credit checks and personal references. He wants to be aware that you have enough business and financial experience not to “cause damage” to his reputation.
3. Relevant background and professional experience. Franchisor understands how important they are to determine your suitability. It means that provided by him training will be enough to start a business and to succeed. By the way background traits are the factors that franchisee has to think over too. It seems for me that it’s too lightly to dive in a business without any professional experience in that business sphere even if it promises high profits.
4. Sometimes franchisor demands some legal requirements and other levels of control. It usually concerns high-cost franchises because in this case franchisor worries more for his reputation as it costs him more…
The second group of factors includes question that franchisee has to ask himself. But this has to be done absolutely honestly. I know that some prospective franchisees changed their minds after answering them and saved their efforts and money. These questions may include:
1. What is the total sum of money do I really can and want to invest in that business?
2. What business sphere is right for me?
3. What average profit do I expect to earn per period of time?
4. What about my background? Am I aware in my professional experience or have access to it?
5. Do I have management and accounting skills?
6. Will I need external financing?
7. Can I work in a team?
8. Will this be my primary income, or supplemental?
Maybe if you give your honest and well-founded reasoning to your potential franchisor this will lead to some additional services or help from his side. Or even he will think over decreasing some fees… Maybe…