FRANCHISE BUSINESS
As more HR activities are outsourced, like
-recruitment
-training
-management development
-payroll administration
-compensation packaging
etc etc
there will be many suppliers [ LOCALS/FOREIGN]
Who will be offering franchise opportunities.
This will raise many questions in the minds of
intersted parties, like
*WHAT IS A FRANCHISE ?
*WHAT ARE THE PROS AND CONS ?
* WHAT DO YOU KNOW ABOUT THE FRANCHISE/
ITS BUSINESS?
*WHAT QUESTIONS TO ASK THE FRANCHISOR?
*QUESTIONS TO ASK YOURSELF ?
=========================================
FRANCHISE PROS AND CONS
ADVANTAGES FOR FRANCHISOR
-new point of customer sales
-new distribution points
-sales promotions activity point
-promotion of the corporate brand
-promotion of the company product brand
-ongoing revenue
-control over the business
-purchasing controls
-volume purchasing
-direct control of selection/approval of sites
-defined territories
=========================================
ADVANTAGES FOR FRANCHISEES.
-use of large corporate name / image
-get access to expertise
-established branded products
-established training
-set up support
-on going coaching
-proven business plan
-ownership
-independent
-leverage of successful brand
-advantages of successful business concept
-brand awareness
-advertising support
-proven business process
-products familarity in the market
-lower costs due to bulk purchase
-support / help in site selection
-support of operating manual
==========================================
START FRANSCHISE -- WHEN
WHEN YOU ARE
-ready to grow fast
-ready to extend distribution geographically
-products need customer service at the point of sale
-lack financial resources to grow on your own
-do not want to invest your own resources
-does not need highly/technically skilled manpower
-needs rapid decentralized distribution
-needs rapid decentralized business operation
-needs indirect control of outer territories
-product does not need high technical service
-have resources constraint
-do not want people on your payroll.
==================================================
FRANCHISE SELECTION CHECKLIST
FRANCHISE opportunities are very tricky in selection.
They tend to be easy to make money. But in most cases
have to work hard.
THE FOLLOWING CHECKLIST COULD HELP YOU TO
BRING DOWN YOUR ERROR IN JUDGEMENT IN
THE SELECION PROCESS.
I.Reputation of the franchisor. *how long has the franchisor co. been in
business?
2 *If it is a new co., how long has the concept been tested ?
3 *Who are the principals'?
4 *What are the qualifications of the people?
*What are the current / future plans of franchisor?
*Is the franchisor registered with franchising council?
*What is the financial standing of the franchisor?
*Have you questioned/surveyed any current franchisee[s]?
2.Franchise product/service. *what is the market image for the
product/service?
*Would you buy/use the product / service yourself?
*Are you prepared‑next 3to 5 years to sell/manage this business
yourself?
*Is this product all year round or seasonal product ?
*What is the demand pattern for this product /service?
*How is this product priced ‑‑up market/low price/ average?
*How is this kind/similar products sold currently?
*What are the selling restrictions?
*Are you entitled to new developments/trademarks/ etc?
*what is the profit margin?
3.FRANCHISED AREA.
*is the franchise sales area geographically defined?
*do you have exclusive right in this area?
*what is the sales potential in this area?
*what is the nature of competition direct/in direct?
*are the existing franchisee successful?
4.FRANCHISE CONTRACT.
*what are the rights / obligations ?
*term ination‑‑how
*cost of termination.
*cost of Joining.
*can you sell the franchise with franchisor's consent .
*who gets the goodwill when the franchise is sold?
*what are your payments to the franchisor‑‑fixtures/advertising/
initiaI stock/royalty/legal/security etc?
*what are the cost associated with setting up?
*can you sell other merchandise?
*is there a monthly target ?
*is there an annual business plan?
5.FRANCHISOR'S ASSISTANCE.
*does the franchisor provide ongoing support
‑‑marketing/promotions/training etc?
*is there a handbook?
*does the franchisor provide accountancy assistanc(
6.CHECK FRANCHISOR'S PERFORMANCE.
*check a number of franchisee in different territories
7.PERSONAL FACTORS
*check your own ‑‑‑ health, can you manage?
*finance,can you manage or loan?
*your aptitude for this business?
*your attitude fot this business?
*your knowledge?
*your skills?
etc etc
FINALLY ARE YOU REALLY PASSIONATE ABOUT THIS
BUSINESS?
IT IS THE PASSION THAT DRIVES TOWARDS THE SUCCESS.
=================================================
WHAT QUESTIONS SHOULD YOU ASK THE FRANCHISOR?
1 .What exactly will you do for me that I cannot do as easily for
myself?
2.What am I expected to do for you?
3.How do I know if I can successfully operate a franchise?
4.Do I need any special experience?
5.Will the franchise company investigate me?
6.How long has the franchise operation been in business?
7. How many franchises are now operating?
8. Where are they located?
9. How many have failed so far? Where are they?
10.May I call and see your franchisees at their places of work?
11.May I ask them questions about their business?
12.May I see the net profit figures for a number of your franchised
operations?
13.Will the products yourfranchises sell still be in demand five years
from now?
How do you know?
14.Is your franchised business active all the year round, or are some
periods traditionally busier than others? Seasonality affects a number of
franchises, but their busy periods compensate for the slower ones.
15.Has a market survey been done on the area where I am
contemplating becoming a franchisee?
16.What is the current and potential competition within my designated
territory?
17.What is the exact and exclusive territory included in my franchise?
18. For how long will I be guaranteed my franchise?
19. What renewal options on my contract can I expect?
20.If premises are involved, who holds the head lease?
21. What products or services can I see?
22.What restrictions apply to how I use the franchise trademark or
name?
23.Do I have to stock minimum inventories of products?
24.Do I have to sell certain minimum amounts each week/month/ year?
25.Do I have to buy my stock from the franchisor?
26.What if I find better prices elsewhere?
27. How much is the franchise fee?
28. Please spell out the royalty fees in detail.
29.What other costs will I be liable to pay?
30. Who determines the prices at which I sell my stock?
31.I know that I will be expected to send detailed reports on a regular
basis, but who pays for their cost?
32.What will I be expected to contribute towards advertising and
promotional expenses?
33.Will you help me to raise the capital I need to become a franchisee?
34.What credit terms do you offer on stock for my franchise?
35.Will I be able to choose the location of my franchise?
36.What help will I receive in finding a good location for my franchise?
37.What pre‑opening, opening and post‑opening assistance will 1,
receive?
38.What training is provided for me and my staff both before and after
we open?
39.What manuals are provided? (operations? training? sales?)
40.What help will I receive with each of the following?
• merchandising and marketing ideas
• public relations
• designing layouts and displays
• local advertising
• inventory control
• financial analysis
41.What trouble shooting help can I expect?
A2.How much of my money will I get back if my franchise fails?
,43.What are the rules governing my rights to sell my franchise?
,44.What if I want to transfer ownership of my franchise to another
person?
45.What termination rights do each of us have as franchisor and
franchisee?
,46.What are the exact conditions under which you have the right to
cancel the franchise?
,47.What happens if you as the franchisor go into liquidation?
48.What if I go bankrupt or into liquidation?
49.What happens to my franchise if you, the franchisor, die
unexpectedly?
50.May I take the contract away now for my legal advisor to study
with me?
51.Do you subscribe to the Franchising Code of Practice? If not, why
not ?
SOME ADDITIONAL QUESTIONS
I TO ASK FRANCHISOR
1.How many franchises are now operating?
2.Where are they located?
3.How many have failed so far?
4.Has a market survey been done in this
particular area?
5.What is the current and potential competition?
6.What is my exclusive and
exact territory ?
7.For how long will I be guaranteed my franchise?
8.Who holds the tease to
the premises?
9.What restrictions apply to the use of franchise trade mark?
10.How much is the franchise fee?
11.What is the royalty fee ?
12.Who determines the prices of the products I sell?
13.Will you help me to raise the capital ?
14.What
i]pre‑opening
ii]opening
iiij post opening
assistance will I receive?
15.How much money will I get back if my franchise fails?
16.Can I sell the franchise ?
17.Can I transfer the franschise to another person ?
18.Under what conditions you will cancel my franchise ?
19.What happens if the franchisor goes into liquidation?
20.What happens if I go into liquidation ?
==================================================
Questions to the potential franchisee
1. Can you list the real reasons why you wish to become a
franchisee?
2. Can you list the negative aspects of being a franchisee
which might irk you?
3. Do you know where you are going to raise the capital you
will need to open your franchise?
4. Do you know that you can get it?
5. Just how knowledgeable are you about the franchise you
are proposing to buy?
6. Are you prepared to give up a large degree of your
independence and work under the control of your franchisor?
7. Are you prepared to support yourself for a prolonged
period whilst you learnhow to succeed as a franchisee?
8. Do you have a realistic assessment of how much you
might spend ‑‑before you begin trading?‑within the first six
months after opening?
9. Do you have a realistic idea of what your net income (after
tax) will be in the first/second/third years?
10.Does the anticipated revenue represent a good return on
investment?
REGARDS
LEO LINGHAM
From India, Mumbai
257As more HR activities are outsourced, like
-recruitment
-training
-management development
-payroll administration
-compensation packaging
etc etc
there will be many suppliers [ LOCALS/FOREIGN]
Who will be offering franchise opportunities.
This will raise many questions in the minds of
intersted parties, like
*WHAT IS A FRANCHISE ?
*WHAT ARE THE PROS AND CONS ?
* WHAT DO YOU KNOW ABOUT THE FRANCHISE/
ITS BUSINESS?
*WHAT QUESTIONS TO ASK THE FRANCHISOR?
*QUESTIONS TO ASK YOURSELF ?
=========================================
FRANCHISE PROS AND CONS
ADVANTAGES FOR FRANCHISOR
-new point of customer sales
-new distribution points
-sales promotions activity point
-promotion of the corporate brand
-promotion of the company product brand
-ongoing revenue
-control over the business
-purchasing controls
-volume purchasing
-direct control of selection/approval of sites
-defined territories
=========================================
ADVANTAGES FOR FRANCHISEES.
-use of large corporate name / image
-get access to expertise
-established branded products
-established training
-set up support
-on going coaching
-proven business plan
-ownership
-independent
-leverage of successful brand
-advantages of successful business concept
-brand awareness
-advertising support
-proven business process
-products familarity in the market
-lower costs due to bulk purchase
-support / help in site selection
-support of operating manual
==========================================
START FRANSCHISE -- WHEN
WHEN YOU ARE
-ready to grow fast
-ready to extend distribution geographically
-products need customer service at the point of sale
-lack financial resources to grow on your own
-do not want to invest your own resources
-does not need highly/technically skilled manpower
-needs rapid decentralized distribution
-needs rapid decentralized business operation
-needs indirect control of outer territories
-product does not need high technical service
-have resources constraint
-do not want people on your payroll.
==================================================
FRANCHISE SELECTION CHECKLIST
FRANCHISE opportunities are very tricky in selection.
They tend to be easy to make money. But in most cases
have to work hard.
THE FOLLOWING CHECKLIST COULD HELP YOU TO
BRING DOWN YOUR ERROR IN JUDGEMENT IN
THE SELECION PROCESS.
I.Reputation of the franchisor. *how long has the franchisor co. been in
business?
2 *If it is a new co., how long has the concept been tested ?
3 *Who are the principals'?
4 *What are the qualifications of the people?
*What are the current / future plans of franchisor?
*Is the franchisor registered with franchising council?
*What is the financial standing of the franchisor?
*Have you questioned/surveyed any current franchisee[s]?
2.Franchise product/service. *what is the market image for the
product/service?
*Would you buy/use the product / service yourself?
*Are you prepared‑next 3to 5 years to sell/manage this business
yourself?
*Is this product all year round or seasonal product ?
*What is the demand pattern for this product /service?
*How is this product priced ‑‑up market/low price/ average?
*How is this kind/similar products sold currently?
*What are the selling restrictions?
*Are you entitled to new developments/trademarks/ etc?
*what is the profit margin?
3.FRANCHISED AREA.
*is the franchise sales area geographically defined?
*do you have exclusive right in this area?
*what is the sales potential in this area?
*what is the nature of competition direct/in direct?
*are the existing franchisee successful?
4.FRANCHISE CONTRACT.
*what are the rights / obligations ?
*term ination‑‑how
*cost of termination.
*cost of Joining.
*can you sell the franchise with franchisor's consent .
*who gets the goodwill when the franchise is sold?
*what are your payments to the franchisor‑‑fixtures/advertising/
initiaI stock/royalty/legal/security etc?
*what are the cost associated with setting up?
*can you sell other merchandise?
*is there a monthly target ?
*is there an annual business plan?
5.FRANCHISOR'S ASSISTANCE.
*does the franchisor provide ongoing support
‑‑marketing/promotions/training etc?
*is there a handbook?
*does the franchisor provide accountancy assistanc(
6.CHECK FRANCHISOR'S PERFORMANCE.
*check a number of franchisee in different territories
7.PERSONAL FACTORS
*check your own ‑‑‑ health, can you manage?
*finance,can you manage or loan?
*your aptitude for this business?
*your attitude fot this business?
*your knowledge?
*your skills?
etc etc
FINALLY ARE YOU REALLY PASSIONATE ABOUT THIS
BUSINESS?
IT IS THE PASSION THAT DRIVES TOWARDS THE SUCCESS.
=================================================
WHAT QUESTIONS SHOULD YOU ASK THE FRANCHISOR?
1 .What exactly will you do for me that I cannot do as easily for
myself?
2.What am I expected to do for you?
3.How do I know if I can successfully operate a franchise?
4.Do I need any special experience?
5.Will the franchise company investigate me?
6.How long has the franchise operation been in business?
7. How many franchises are now operating?
8. Where are they located?
9. How many have failed so far? Where are they?
10.May I call and see your franchisees at their places of work?
11.May I ask them questions about their business?
12.May I see the net profit figures for a number of your franchised
operations?
13.Will the products yourfranchises sell still be in demand five years
from now?
How do you know?
14.Is your franchised business active all the year round, or are some
periods traditionally busier than others? Seasonality affects a number of
franchises, but their busy periods compensate for the slower ones.
15.Has a market survey been done on the area where I am
contemplating becoming a franchisee?
16.What is the current and potential competition within my designated
territory?
17.What is the exact and exclusive territory included in my franchise?
18. For how long will I be guaranteed my franchise?
19. What renewal options on my contract can I expect?
20.If premises are involved, who holds the head lease?
21. What products or services can I see?
22.What restrictions apply to how I use the franchise trademark or
name?
23.Do I have to stock minimum inventories of products?
24.Do I have to sell certain minimum amounts each week/month/ year?
25.Do I have to buy my stock from the franchisor?
26.What if I find better prices elsewhere?
27. How much is the franchise fee?
28. Please spell out the royalty fees in detail.
29.What other costs will I be liable to pay?
30. Who determines the prices at which I sell my stock?
31.I know that I will be expected to send detailed reports on a regular
basis, but who pays for their cost?
32.What will I be expected to contribute towards advertising and
promotional expenses?
33.Will you help me to raise the capital I need to become a franchisee?
34.What credit terms do you offer on stock for my franchise?
35.Will I be able to choose the location of my franchise?
36.What help will I receive in finding a good location for my franchise?
37.What pre‑opening, opening and post‑opening assistance will 1,
receive?
38.What training is provided for me and my staff both before and after
we open?
39.What manuals are provided? (operations? training? sales?)
40.What help will I receive with each of the following?
• merchandising and marketing ideas
• public relations
• designing layouts and displays
• local advertising
• inventory control
• financial analysis
41.What trouble shooting help can I expect?
A2.How much of my money will I get back if my franchise fails?
,43.What are the rules governing my rights to sell my franchise?
,44.What if I want to transfer ownership of my franchise to another
person?
45.What termination rights do each of us have as franchisor and
franchisee?
,46.What are the exact conditions under which you have the right to
cancel the franchise?
,47.What happens if you as the franchisor go into liquidation?
48.What if I go bankrupt or into liquidation?
49.What happens to my franchise if you, the franchisor, die
unexpectedly?
50.May I take the contract away now for my legal advisor to study
with me?
51.Do you subscribe to the Franchising Code of Practice? If not, why
not ?
SOME ADDITIONAL QUESTIONS
I TO ASK FRANCHISOR
1.How many franchises are now operating?
2.Where are they located?
3.How many have failed so far?
4.Has a market survey been done in this
particular area?
5.What is the current and potential competition?
6.What is my exclusive and
exact territory ?
7.For how long will I be guaranteed my franchise?
8.Who holds the tease to
the premises?
9.What restrictions apply to the use of franchise trade mark?
10.How much is the franchise fee?
11.What is the royalty fee ?
12.Who determines the prices of the products I sell?
13.Will you help me to raise the capital ?
14.What
i]pre‑opening
ii]opening
iiij post opening
assistance will I receive?
15.How much money will I get back if my franchise fails?
16.Can I sell the franchise ?
17.Can I transfer the franschise to another person ?
18.Under what conditions you will cancel my franchise ?
19.What happens if the franchisor goes into liquidation?
20.What happens if I go into liquidation ?
==================================================
Questions to the potential franchisee
1. Can you list the real reasons why you wish to become a
franchisee?
2. Can you list the negative aspects of being a franchisee
which might irk you?
3. Do you know where you are going to raise the capital you
will need to open your franchise?
4. Do you know that you can get it?
5. Just how knowledgeable are you about the franchise you
are proposing to buy?
6. Are you prepared to give up a large degree of your
independence and work under the control of your franchisor?
7. Are you prepared to support yourself for a prolonged
period whilst you learnhow to succeed as a franchisee?
8. Do you have a realistic assessment of how much you
might spend ‑‑before you begin trading?‑within the first six
months after opening?
9. Do you have a realistic idea of what your net income (after
tax) will be in the first/second/third years?
10.Does the anticipated revenue represent a good return on
investment?
REGARDS
LEO LINGHAM
From India, Mumbai
Hi Leo Lingam: Thats a wonderful document. Thanks for sharing. Actually i was looking out to take up franchise business, This document is of great help to me. Thanks once again. Regards Radhika
From India, Madras
From India, Madras
Dear Leo
You have presented a very informative document.
I had someting like franchise business rolling in my head, but it was not getting shape, when I saw this document every aspect of franchise business took a very good and workable shape. Thanks a lot for sharing at the right time.
Regards
ShailGiri
From Nepal, Kathmandu
You have presented a very informative document.
I had someting like franchise business rolling in my head, but it was not getting shape, when I saw this document every aspect of franchise business took a very good and workable shape. Thanks a lot for sharing at the right time.
Regards
ShailGiri
From Nepal, Kathmandu
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