In my experiences I’ve had the opportunity to observe a number of franchisee startups in several different franchise systems. One conclusion I drew from this experience was how important the first ninety days are to a franchisee startup. An important factor to this time period is the amount of support the franchisor provides to a new franchisee. When evaluating a franchise opportunity, a prospective franchisee needs to include the amount of services and support they can expect to receive during their grand opening and startup phase, on their checklist. This includes sample press releases, marketing materials, advertising support and on-site assistance.
It can be exciting to become part of a new and unique franchise; however, don’t expect to be investing in the next KFC or McDonalds. In fact, a study by FranchiseGrade.com of 405 startup franchise systems from 2010 to 2014 found that only 154 or 38% had opened 5 or more outlets within the 5 year period.
There are a number of reasons why it’s important for a new franchisee to have a smooth launch to their new business and especially during this critical time to start their franchise.
As a franchisee is about to open their new franchise, it’s important to have several important steps in place:
Before investing in a franchise opportunity, a franchisee candidate should identify the support they can expect from their franchisor and have confidence that their startup phase will be off and running.
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.