There are numerous activities that relate to the process of evaluating a franchise opportunity. These activities include; reviewing the FDD and especially the franchise agreement, gaining feedback from franchisees and analyzing the performance of the franchise system. However, one area that doesn’t get the attention it deserves pertains to the culture of the franchisor. Corporate culture begins with franchise leadership and works its way throughout the organization. The importance of corporate culture applies to all companies, with the exception that franchisees rely upon the franchisor to provide the vision, guidance and support necessary to operate a healthy franchise system.
In order to effectively evaluate the corporate culture of a franchisor focus on the following areas:
The corporate culture in a franchisor organization can be overlooked when evaluating a franchise opportunity. However, its the corporate culture of a company that sets the example and standards for serving its employees, shareholders and customers. The same is true in the case of a franchise organization with the exception that unlike most companies there are franchisees who have invested their capital and rely upon their franchisor to assist in their road to success.
When it comes to franchising, Murphy’s Law comes into play more often than desired. In many cases, a new franchise takes off slower than anticipated.
Before a prospective franchisee invests they must review the information disclosed in the Franchise Disclosure Documents.
The most immediate consideration is usually how much is the franchise fee and other ongoing payments like royalty and advertising fees.
In the franchise industry, franchisors can view comparisons and relationships between consumer satisfaction for the products or services a franchise offers.
A good consumer experience is not a reason to invest in a franchise. It skews the decision-making process of a prospective franchisee from start to finish.