Franchise opportunities

Assess the franchise opportunity - is it a good franchise?

It is vital that you have confidence in the franchisor you choose. In order to gain this you must ask questions about their franchise business and asses the structure of their organisation at the early stages.
 
To evaluate the franchisor, ask the following questions:
 
  • How long has the franchise been running? What professional help did you have went setting up the franchise?  Did you run a pilot franchise?
  • Is the franchisor financially sound?
  • What is the director's background? What did they do previously, and why did they go into franchising?
  • Does a comprehensive operations manual support the training?
  • How thorough is the training at the start-up stage and thereafter?
  • Does the franchisor run outlet(s) in a similar area/territory to yours in Australia?
  • How successful is the franchisor and existing franchisees in Australia and, if applicable, abroad?  
  • If any, how many franchisees have ceased trading in the past 12 months?
  • How many franchises have they opened in the last 12 months in Australia, and internationally?
  • How many applicants do they reject?
  • What is your financial strength? Is the business profitable?
  • How is your head office organised?
  • Are you a member of the Australian Franchise Council? If not, why not?
Good franchisors will always allow you free access to any franchisees in their network and, in most cases, existing franchisees will be happy to talk things over with you
 
Talk to their existing franchisees
 
You should visit existing Australian franchisees to learn from their experiences and to find out their opinions on the services provided by the franchisor. Good franchisors will always allow you free access to any franchisees in their network and, in most cases, existing franchisees will be happy to talk things over with you.
Some of the questions you should ask are:
 
  • Is your franchise profitable now?
  • Is the franchisor aware of changes in the Australian marketplace, and quick to adapt?
  • If there is illness, does the franchisor offer to help?
  • What kind of on-going support do you get?
  • Did you get good training, systems and manuals?
  • Is the franchisor keeping their end of the bargain?
  • How long did it take to recoup your investment?
  • Does the franchisor welcome suggestions from franchisees?

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