Question: Ive just spent a day with a franchise company
Im interested in, speaking with representatives from several
departments within the company. Each person told me how much support
I would receive from them if I were to become a franchisee and how
they would help me operate my business. It all sounded pretty good,
but Im wondering how I can verify that theyll actually
do what they promise and that this isnt just part of a sales
Answer: Franchisors want to put their best foot forward
when talking with a prospective franchisee. They know youre
evaluating them as much as theyre evaluating you, so youre
wise to investigate.
There are several ways to evaluate a franchises support program:
* Check Item 11 - Franchisors Obligations - of the Uniform
Franchise Offering Circular. This item lists the support the franchisor
is contractually promising to provide to franchisees. Keep in mind
that whats listed in the UFOC is the minimum amount of support
they promise to provide.
For example, if the UFOC states you will receive new advertising
materials for local advertising annually, but the franchises
advertising representative told you theyre sending new materials
twice a year or even quarterly, there may not be a disconnect. They
may be doing more than they promised. Still, you should dig a little
deeper in your research to be certain.
Also verify that the services you heard about in your meetings,
particularly the services you considered most important, are included
as franchisor obligations in the franchise agreement. Determine
whether the level of support during your start-up phase - including
site development and training for you, your management team and
staff - is adequate.
* Ask about the credentials of the support staff. Are they professionals
with experience in their field (i.e, advertising) and in the franchisors
industry? How long have they been with the franchisor? What is the
franchisors turnover on support staff? How does the franchisor
train their support staff? Franchisors with experienced professionals
on staff are probably committed to supporting their franchisees.
A great deal of your regular support will come from the franchisors
field staff. If you didnt get the opportunity to meet the
field person assigned to your area, set up a time to
do so as soon as possible. Does your field person have experience
in operating and managing the business, including multiunit operations?
What level of authority does he have? How often will he visit you,
and how does he generally help franchisees during these visits?
How many franchised locations is he responsible for? Ask the other
franchisees he works with about his level of commitment and the
usefulness of his advice.
* If possible, visit several of the businesses and observe how
theyre run. Common problems may signal a larger issue. For
example, lack of interior signage or poor merchandising may indicate
the marketing department isnt providing adequate support.
Dirty stores or restaurants may indicate a lazy or overloaded field
staff. Poor customer service may be the result of poor training.
If the franchisor allows it, work in one of the locations for a
few weeks to take a test drive of the system. Theres
no better way to understand whether the franchisors services
meet the franchisees needs than observing the system from
* Ask current and former franchisees whether the franchisor has
provided the level of support they promised. Be specific and go
through each area in which you expect support - training, marketing,
advertising, new product development, operations, etc. Ask about
the quality of support - are the field staffs solutions practical
and affordable? Is the support staff accessible and responsive if
they have an unexpected or unusual problem or request? How quickly
does headquarters get back to them with an answer to a question?
* Ask the other franchisees about results. How effective was the
last advertising campaign in raising sales? How effective and efficient
is the training program for the franchisees staff? Does the
franchisor have an active R&D program that keeps its consumer
offering fresh and competitive? If the franchisor provides franchisees
with product, do they provide quality merchandise and supplies?
Are the prices they charge the franchisees fair, and do they have
a solid history of having key items in stock?
Try to determine where the franchisor is placing their emphasis
and investing their resources. While you may consider it exciting
to join a system thats expanding rapidly domestically and
internationally, you have to focus on whether theyre investing
in the day-to-day support of franchisees.
Dont rely on a franchisors outside sales broker or
even an inside salesperson as your only source of information about
the franchises services. Get your answers directly from the
people providing the support you are counting on.
By doing your homework, you can access not only the quantity, but
also the quality of support youll receive from the franchisor.
Ask any questions you have before you sign the franchise