Modern Franchise Magazine August 2013 - Page 37

3 Financial soundness That’s a tell tale sign, if any. Make sure you go over the financial strength of the franchisor in great detail. Every franchisor will sell you the success stories of other franchisees - while you may listen to that with interest (and verify it with the franchisee), you must also ensure that the franchisor is itself strong enough to stand . Don’t assume that there’s always a sound company behind a strong brand. 4 Past history A rapidly growing franchisor might brag about how they’ve grown in recent years. That’s a red flag for you - numerous new franchisees are usually accompanied by a number of that exit the system. Check how many franchisees have left the business, and what happened to them. THE DIGITAL FRANCHISE CENTER The Only Global Online Business and Franchise Opportunities Center Find online business opportunities from as little as $500 to over $1,000,000. Available Opportunities Retail Online B2B B2C Services IT Software Graphic Design Web Design & Development Programming Equipment Sales Online Stores Digital Marketing Recruitment & HR Payroll Medical Publishing www.digitalfranchisecenter.com 5 Supplier Arrangements Some franchises are based around the franchisor supplying all the components of the franchise and ongoing supplies. Make sure they can deliver over the longer term, that there are solid supply arrangements in place and that the price you pay is competitive. How many times do you hear of a franchisee complaining about the fact they pay more from the franchisor or the nominated supplier that they can get as an independent business. Imagine the repercussions if a major chain decided to start a price war - like Coles & Woolworths with bread. It could quickly kill your profitability. 6 Attitude of other franchisees Be sure to speak with several existing franchisees to get their perspective on what it is like to partner with the franchisor. If they seem satisfied on the support they receive, as well as the performance of their business, the opportunity is probably worth your consideration too. maxiom Modern Franchise Magazine | 37