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The intention of this blog is to open a conversation amongst franchisees, lawyers, consultants, franchisors and other industry participants to challenge prospective investors to more easily identify and eliminate problematic franchise offerings to encourage investment in thorough investigation of more feasible franchises.
Perhaps consider this as stage 1 to real due diligence in the hope that more people actually perform stage 2 rather than simply make often regretable and uninformed decisions.
Most that visit BMM regularly would hopefully all appreciate that due diligence prior to signing a franchise contract needs to involve a true understanding of risk and the broad and sometimes complex considerations that many fail to appreciate including the many considerations that the franchising industry typically neglects to publish.
I’ve selected ‘Training and Support’ but readers may have other suggestions. I’ve selected Training and Support for a number reasons and one being that these are often neglected to varying degrees where prospects mostly believe the hype that suggests that these benefits go hand in hand with franchising. But there is a second reason for my selecting training and support.
One thing that quality franchise systems have in common is that they deliver on these benefits to ensure the success of the franchisee to primarily benefit the franchisor’s profit and network growth. There are other important secondary reasons such as franchisor risk minimization but, for the sake of staying on topic I see no need to open that door to the ‘whys’, at least for now.
But how does the novice decide on what is worthwhile training and support that indicates a particular franchise system is hell bent on the success of franchisees and those that merely provide an appearance of delivery?
Induction training typically just happens. Franchisees are generally are in no position to have a valid opinion on its effectiveness prior to when they are ‘on their own, working for themselves’.
The value of induction training can be an early warning flag as to the quality of what training is to follow where sometimes it is not really considered by the franchisor as setting the franchisee off on the magical road to success.
With regard to ongoing training the question is whether it is significant in adding value to the brand, and therefore franchisee investment return, while enhancing franchisee profit performance. That would be one extreme while the other is minimal or no training and/or training that offers little or less to the franchisee’s interests.
Similar questions can be asked about franchisor provided support. Is it driven because franchisee failure is not an acceptable option or is it designed to ensure compliance to systems that mostly or only benefit the franchisor?
If prospective franchisees can obtain real information as to the value of training and support on offer then they can either proceed with a deeper investigation or drop any consideration of a franchise system that does not deliver on the basis that achieving ROI would obviously be a struggle reliant on the initiative of individual franchisees within a questionable franchise system.
So I’ll ask readers;
Now I could have suggested other primary indicators of a quality franchise offering such as the existence of an effective independent franchisees’ association or healthy and minimal franchisee turnover but I’ll leave those topics for the consideration of those who are willing to contribute.
There are a number of areas of due diligence that franchisees typically learn about in hindsight and numerous that many franchisees never become aware of. The novice can pay a large price for the knowledge that comes too late.
Any suggested ‘quick’ tests do not ensure the success or guarantee the failure of a franchisee. They do not eliminate the need to acquire a true understanding of the full complexity of investment risk or numerous other influences that assist in success or failure. Hopefully this discussion might offer a clearer understanding of a basic elimination process that would see prospective franchisees saving their dollar investment in due diligence for those franchise systems that hold positive indicators.