Franchise Opportunities – Evaluation & Sales

Both the franchisor and franchisee candidates are tasked with a very important upfront evaluation process; it is a long-term relationship that both parties must assess to determine fit. A wide range of material is readily available online and through franchisors for those interested in becoming a franchisee. Franchisors greatly benefit from having a well-prepared information package in place to help attract the most qualified people specific for their brand. The typical information gathering process entails a general inquiry to the franchisor or a franchising broker, a prequalification survey and then in-person meetings with a franchisor’s qualification and/or sales team. The franchisor will also provide the Franchise Disclosure Document to candidates during this process. As both parties successfully move through the exploration of this opportunity, more in-depth conversations take place on business plans and financing matters.

A few overall considerations for both franchisors and franchisee candidates to keep in mind:

  1. Financial: Net worth and liquid funds; sources of capital- where is the money coming from?
  2. Time: Owner-operator or an off-site investor? Is this business primary or secondary to other job or business obligations?
  3. Experience: The amount of time and relevant experience running a business and/or familiarity in the specific’s concept’s core business.

Once the franchisor and franchisee candidate are comfortable with everything they have learned about each other, the sales process begins. Franchise sales representative should focus on quality over quantity- the who, what, where and how many units over a specific amount of time will drive how a concept’s brand equity develops. Selling franchises without properly screening candidates or a strategic approach to development areas/schedules is a disservice to the future growth of the brand. By the same token, franchisee candidates should conduct their own due diligence on any specific territories and the respective development schedule being offered for sale.

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