It’s easy for franchisors and franchisees to find business advice in magazines or on the internet. It’s the good advice that can make or save a business that’s truly hard to come by.
Dennis Monroe, a partner in Krass Monroe, PA, a Minneapolis law-firm that specializes in multi-unit franchise finance, mergers and acquisitions, and taxation, has an insightful column in March’s edition of Franchise Times magazine. Monroe writes candidly about the testy nature of the franchisor-franchisee relationship. For the sake of both parties, Monroe urges that both sides have a very clear understanding of where the franchise is going so that no one is under any illusions when there are bumps on the road.
Dennis’s first two sentences are interesting:
“In today’s fluid and volatile franchise world, it is imperative that a franchise system knows itself and where it’s going. As I have discovered in my representation of many franchisors and franchisees, it is a rare franchisor that has a good understanding of its franchisees’ financial positions.”
Now Dennis goes on to outline why the situation is like this. But his real interest in writing this column is to highlight the steps franchisors and franchisees can take together to make daily business function smoothly. The better both sides understand each other, the better off everyone will be in the end.
He goes on to outline six areas that franchisors and franchisees can focus on to improve transparency:
- Balance Sheet
- Franchisee Questionnaire
- Corporate Structure
- Landlords Positions
- Supplier and current accounts payables
We urge both franchisors and franchisees to read the article. Following Dennis's advice can only help to make a franchise run better.