Another of the many due diligence topics you need to explore and research for discussion with a potential franchisor is Vendors/Suppliers. This is especially true for most business in the franchise industry. All of them require a solid, reliable network of vendor contacts. These are the people who will be providing the initial and ongoing products and services to your franchise.
The types of vendors who will service your business depend on your franchise type. For example: a food service franchise will not require the same set of vendors as a fitness studio. Certainly, the franchisor will already have a network of vendors in place based on the needs of their primary location. But how would that help you if you plan to open a franchise in a different state? That’s just one of the questions you’ll want to a straight answer about when you talk to the franchisor. Below are several more.
Vendor Questions for the Franchisor
Obviously there are myriad products and services you will need, and cases where it makes better sense to establish contact with a vendor and set up an account in your local area. As mentioned, vendor selection depends greatly on the nature of the business, so some of these questions may not be applicable for your research.
Vendor Selection Criteria for the Franchisee
Keep in mind that once you have started the ball rolling (by signing the Franchise Agreement), you’ll need to start lining up vendors/suppliers fairly soon thereafter, and long before you are ready to open the doors for daily operations. The sooner you get started, the sooner you can establish friendly vendor-client relationships, which can be leveraged into discounts and other perks down the line – which can be extremely valuable for getting your ongoing supplies.
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.