Seek answers before signing

• Seek answers before signing.pdf

Seek answers before signing.pdf

With a new franchise being rolled out every other week, it can be overwhelming for those in the market to run their own business.

It could be easy to be seduced by the hype.

But franchise consultant Rod Young warns that there are several key questions you should be asking yourself before you sign on the dotted line.

Young, the executive director of DC Strategy, says people should make sure the franchise they are interested in measures up.

“The success of any franchised business lies in the foundation of the parent company,” he says.

“My advice to any would-be franchisee is to ensure that the parent company is well established, profitable and well capitalised, with a well-known trademark and reputation.”

Young says in addition to having a good, successful system a franchisor must assist the franchise on several levels.

This includes finding a good location, helping to plan the layout of the store, training the franchisee, helping to hire staff, assisting with an opening promotion to get the business off the ground, and being on hand for the first few weeks of operation.

“This will help to ensure the franchise business starts smoothly and that there is a transfer of expertise via a combination of initial and ongoing training and ongoing store visits by the franchisor,” he says.

“The real test of franchising comes once the store is opened. This is where the franchisor’s expertise in sourcing/supplying product and marketing/promoting the brand become critical success factors.

Have you chosen the right franchise?

• Is the parent company of the franchise well established, profitable and well capitalised?
• Is the franchise’s trademark easily recognisable and well known?
• Has it demonstrated a record of success in its particular area?
• Can goods be sourced directly from key suppliers at the right price?
• Does the franchise have quality locations in popular shopping centres and busy strip shopping areas?
• Is the product consistently of an excellent standard?
• Is there continuing training and education of all staff?
• Are there advertising marketing and public relations programs to keep the brand in front of customers?
• Are the products/services offered at a competitive price?
• Are performance goals established?
• Are there incentives for staff and stores who achieve sales above expectations?

If you answer “yes” to any of these questions, you might have the right franchise.

Source: Rod Young, DC Strategy

Herald Sun “Franchising Oppportunities”, p78

2 November 2006