When presenting their franchise concept to qualified prospects, franchisor staff should balance their presentation with their confidence in the franchise and the amount of effort it takes for a franchisee to be successful. Franchisors that follow this advice have a better chance of developing a successful franchisee network.
It’s been my experience, that one of the reasons a franchisee fails is because they didn’t realize how hard they had to work in order to be successful. This situation can lead to a negative outcome for both parties. Franchisees can get burnt out, lose their passion for the business and in some cases sue the franchisor. When this problem arises, one can make a case to place responsibility upon both parties.
Since franchisors administer and control the franchise sales process, they can take steps to make sure that these situations are avoided or at least minimized. The need to sell new franchises places some franchisors in a difficult situation that can drive some franchisors to become overzealous in their franchise sales process.
Franchisors should verify certain attributes of their candidates in order to obtain the most qualified franchisees. The following are the critical items that should be used to qualify a candidate:
However, there is a fine line to the qualification process, which can often get crossed. This is because the franchisor staff needs to present the franchise opportunity in a positive way and provide information and the right answers to the candidate’s questions. This aspect of the franchise sales process can provide false encouragement to a franchise candidate. However, the franchisor needs to be realistic regarding what it takes for the franchisee to succeed.
Here’s how a franchisor can deal with this delicate situation.
Franchisors need to present their franchise opportunity in a positive way but balance this approach with a realistic description of exactly what it takes for a franchisee to be successful. Failing to take this approach, can lead to future problems with those franchisees that believe that achieving success is easier than it really is.
60% of franchisors provide a financial performance representation (“FPR”) under Item 19 in their Franchise Disclosure Document.
As part of a franchise candidate’s due diligence process, it should be expected that certain questions will be directed to franchisor staff.
It was quickly apparent that some employees struggled working from home. They had never experienced the challenges associated with time management.
Detailed studies on emerging franchise success rates, errors in Item 20 disclosure and sector performance, Franchise Grade’s reports help you.
There have been various changes in average franchise investments during this time, some changes were more dramatic than others.