How should you look for the right franchise system?

Performance Assessment

The following performance assessment enables you to scrutinize the service package offered by the franchise systems you are interested in and examine just how extensive the services offered by the franchisor are. For: when it comes to franchising, it is specifically these services that will contribute towards your success as a franchisee.

Business Idea / Concept

  • Having looked into the business idea in great detail, is it still convincing?
  • Does the business idea have a certain originality?
  • Has the conceptional realisation of the business idea been successful?
  • Is the concept accompanied by a comprehensible strategy?
  • Does the concept consist of a range of products/services which has been especially put together to cover the requirements of a certain target group?
  • What competitive advantages can the franchisor exploit?

Business / Area

  • Is the potential contractual territory characterised by clear criteria?
  • Does the franchisor promise in the contract that the sales area will be protected?
  • Is this area protection dependent on certain targets being reached?
  • What protection does the franchisor offer against the activities of those competitors which are financially connected to him?
  • What is the competitive situation like in the area being considered?
  • Has the economic potential of the area been confirmed through suitable market studies?
  • What do you estimate the demand will be for this concrete range of products/services?
  • Which legal steps must be taken to start the business?
  • How does the franchisor support you in the search for and choice of a suitable site?
  • Does the franchisor take over the planning of the business set-up or will he make the set-up available to you?
  • Does the franchisor have a detailed plan of all the necessary steps required to start up the business?
  • Are people from the head office present to offer advice at the opening of the business?
  • What support measures are planned for the opening of the business?

Financing / Profits

  • What investment sum does the franchisor estimate the building-up of the business to be?
  • Will the franchisor present you with an investment appraisal of a typical franchisee business?
  • Does the franchisor draw up a profit-volume forecast for each new business?
  • Does the profit margin at least correspond with the branch average?
  • Do the calculations and forecasts presented by the franchisor appear to be realistic?
  • Do the planned personnel salaries correspond with the regional conditions?
  • Are the results of comparable partner businesses made available in order to enable you to examine them in detail?
  • What concrete financing help does the franchisor offer?
  • How is the franchisor involved in the franchisee’s operations research?
  • To what extent does the franchisor offer support in looking for loans?
  • Does the franchisor coordinate the purchasing in order to obtain more favourable conditions?

Brand Name / Marketing

  • Has the franchisor had his convincing brand names protected?
  • Does the franchisor have market studies carried out regularly?
  • What main areas are assessed when the franchisor evaluates the market?
  • Are the franchisor’s advertising proposals constantly updated?
  • To what extent does the franchisor carry out national advertising?
  • Does the franchisor attempt to find key customers?
  • Are the franchisor’s advertising activities supplemented by professional press work?
  • How are the costs of central marketing measures distributed?
  • What are the minimum annual costs set by the franchisor for marketing measures?
  • Does the franchisor offer the franchisee any support at regional trade fairs?
  • Does the system professionally market its products/services?

Training / Information

  • Can the franchisee gain experience at an existing business before starting his own business?
  • What initial and additional training courses does the franchisor offer?
  • Does the training programme cover all the important aspects of the business?
  • Are training courses also offered for the franchisee’s employees?
  • Where do the training courses take place and who carries the costs?
  • Do meetings regularly take place in order to exchange experiences?
  • Where do such meetings take place and who carries the costs?
  • Are the training courses and meetings obligatory or voluntary for franchisees?
  • What information are the franchisees required to collect and pass on?

Supervision / Assistance

  • If requested by the franchisee, does the franchisor take over the accounting?
  • What measures are taken to ensure a uniform standard of quality throughout the system?
  • Does the franchisor have the certificate ISO 9000 for official standard quality specifications?
  • What support does the franchisor offer in personnel matters?
  • What rights does the franchisor have to issue instructions to the franchisees?
  • What methods of supervision does the franchisor employ?
  • To what extent is the franchisee involved in the supervision?
  • Is there only one person responsible for offering assistance or are there a series of specialists available concentrating on different areas?
  • What management experience do the managers and assistants at the head office have?
  • How often do the assistants from head office visit the franchise businesses?
  • Do these assistants appear to be open, interested and willing to help?
  • Does the franchisor reguarly provide comparisons of the businesses?
  • What support is offered by the system for health or financial emergencies?

Prices for Acquiring Materials

  • How high is the one-off entry fee and what benefits does it cover?
  • How high is the regular franchise fee and what benefits does it cover?
  • What is the basis of calculation for percentage fees?
  • Can the fees be considered to be fair?
  • What fees must be paid and when must they be paid?
  • Is it possible to delay payment of the entry fee or to pay it in installments?
  • To what extent is the franchisee obliged to acquire the goods from the franchisor and which goods does this involve?
  • Does the franchisor put a markup on the price of delivery and how high is this?

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