Franchisee Checklist – Assessing the Business Type
- Is this a genuine business format franchise? (It could be a product distributorship or agency which is not really a franchise but is promoted as a business format franchise and should therefore be treated with caution).
- Has the franchised business been thoroughly proven in practice?
- If it is an overseas franchise, how successful has it been in its own and other markets?
- Is there a strong, distinctive trade name associated with the product or service?
- Is there an awareness of the brand in the country or state in which you want to locate it?
- Are the franchise's prices competitive and can this competitiveness be maintained?
- Is there adequate backing in terms of guarantees and service facilities?
- Is the product or service new?
- If there are competitors, has the product or service any distinct advantage over theirs?
- Are the products produced by a patented method or is the service based on an exclusive process?
- Is the product or service defendable (i.e., how vulnerable is it to imitation and/or competition)?
- Is the product supply source guaranteed in the future?
- Does the product or service have long-term market appeal, or could it be a passing fad or fashion?
- If the franchise is being newly imported from abroad, will it hold a similar appeal in your market? Has it already been tested there?
It is important when you are assessing a franchise operation not to simply accept that financial results or projections from one area will automatically be repeated in your chosen location. A franchise that works well in Chicago or London may not be successful in Sydney or Toronto. Carry out your own market research to satisfy yourself before making the investment.