Testing the New Franchisor Waters

Last Thursday, Tim offered great commentary on an experience he had working with a restaurant operator that wanted to start franchising his business. As a fitting follow-up to that post, I found this article on Entrepreneur.com that takes a look at the potential franchisee's side of things when evaluating new franchisors. As Tim's experience and the article show, unproven franchisors are a risky investment. If you're looking at buying a franchise and considering a newer concept, it's incredibly important to do your research.

The article suggests that potential franchisees check out things like how long the company has been in business and how much industry experience the management team has. Reading up on the financials and growth plans and talking with existing franchisees if there are any are also recommended.

As I was reading these suggestions, I started to think about what F.C. Dadson's team looks for when deciding to take on a new client, and you know what? Our evaluation process isn't too different from the one outlined in the article. A strong management team, solid financials and sales program, a realistic growth plan and established FDD and operations manual are all things we take into consideration. Of course there are other things like whether their design needs fit our capabilities and so on, but it was interesting to see just how similar we are to a potential franchisee when checking into new franchisors.

With money as tight as it is, very few of us can afford to take the same risks we could have a few years back. When making new investments -whether it's signing a franchise agreement or signing a new client, it looks like we could all benefit from doing a little homework before jumping in.

--Liz Blohm