Performing the Franchise Due Diligence | Brand loyalty

There are new franchise opportunities that come everyday. However, not all of these opportunities will necessarily turn out to be profitable business opportunities. Entrepreneurs will want to perform franchising due diligence to make sure that they verify that a franchising opportunity is worthwhile.

Investigating the Franchise

The very first thing that someone will receive when becoming a franchisee is the franchise disclosure document. This document is sent to the franchisee that provides important information, including an access code that allows the franchisee to gain access to the company?s website. When reading the disclosure document, it is crucial that the franchisee write down any questions that he or she has so they can be brought up to the franchisor. One of the factors to consider when becoming a franchisee is the size of the franchise and how much the franchise has grown. Another factor to consider are the people who are involved in running the franchise. They should have a lot of experience.

Receiving Help From the Franchise

When performing a franchising due diligence, the entrepreneur will want to pay close attention to how he or she is being treated. The franchise should provide support both as the business is starting up and as the business continues to operate. The franchise should also have an effective training program that can prepare entrepreneurs for implementing some of the newer products that are sold through the franchise. Of course, those who are becoming a franchisee will also want to know how much money they will make and when they can reasonably expect to make a profit from the business opportunity. This is partially based on the location of the franchise, the amount of traffic passing through the area and the amount of competition that the franchisee can expect to receive. Also, the franchisee should investigate the advertising fees in comparison to the revenue that the franchisee can expect to receive.

Sources for Research

Conducting due diligence is a fact-finding mission that requires that franchisees tap into one of several sources, including the franchisor, current and former franchisees and websites that are devoted to researching franchises. The franchisor should not be the only source of information, since it is likely to present the company in a positive light.

Source: http://www.teachuohio.org/performing-the-franchise-due-diligence.html

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