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Franchisors Should Have Key Competitor Statistics

Published on August 25, 2017

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Since franchisors operate in a highly competitive environment it’s critical that franchise development staff have as much data on their competitors as possible. Their knowledge should extend beyond knowing the initial franchise fee, quality of the franchisee territory, royalty fee and details regarding Item 19 disclosure. This type of information, which is accessible for prospective franchisees in an FDD or a franchisor website, provides limited insight into a competitor. As franchisee candidates review their investment options they will acquire crucial information.

Franchisors need to have the in-depth knowledge to why their franchise investment is the best option for them. Imagine a member of franchisor staff being unable to answer a question asked by a candidate? This lack of knowledge won’t invoke confidence on the part of the candidate.

Franchisors that have a knowledgeable franchise development team present competency, knowledge and credibility to franchise candidates. When a prospective franchisee asks a question about a competitive franchise they are able to answer it with quantifiable data.

The confidence that is earned by having the answers at your fingertips is invaluable in the franchise sales process.

Once you’ve identified your franchise competitors you should have the following statistics:

• Number of franchisor law suits as a percent of franchise locations
• Net franchisee growth based upon new locations minus recent closures
• Rate of franchisee growth for minimum of 2 years
• Amount of Sold But Not Opened franchises for most recent year
• How the franchise compares and benchmarks to franchises in the same category, sector or overall industry

Prospective franchisees who are looking to invest, need to have confidence in the knowledge and professionalism of the franchisor staff. By understand the offerings of franchises that are operating that same marketplace, franchisors can distinguish why they are different, why they should earn a prospects franchise investment. Being aware of your strengths and weaknesses will help your validate why your franchise is the best option for their investment.

About the Author: Ed Teixeira
Ed Teixeira is a recognized franchise expert with over 40 years’ experience in the franchise industry. He has served as a corporate executive for franchise firms in the retail, manufacturing, healthcare and technology industries and was a franchisee of a multi-million-dollar home healthcare franchise. Ed and Richard Chan are the authors of a new textbook, Franchising Strategies: The Entrepreneurs Guide to Success, to be published on July 1st by Routledge on July 1st. He has participated in the CEO Magazine Roundtable Meetings with business leaders from around the country and has spoken at a number of venues including the International Franchise Expo and Chinese Franchise Association in Shanghai, China. Over the course of his career, Ed has been involved with over 1,000 franchise locations and launched franchise concepts from existing business models. Ed can be contacted at [email protected].

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