franchising aspects Aug, 06 2010

Benefitting from experienced franchisees

Entrepreneurs yearning to establish themselves as business owners are always on the look out for the best franchise deal. However, being novice to the field, the best way to guard against the fraudulent franchisors is to avail the information provided by

By Abha Garyali
Sub Editor
Benefitting from experienced franchisees

Theoretical knowledge is an integral part of every learning process. Knowledge regarding franchise know-how, franchisors and franchise systems are a good source to safeguard against franchise frauds. However, one of the best ways to have an insight regarding franchise system is to communicate with the existing franchisees of a particular brand. Existing franchisees already have first-hand experience of that particular business; thereby can guide entrepreneurs aspiring to take the franchise route to taste success.

The first important step while initiating a franchise agreement with any franchisor is to know more about the existing franchisees who are experienced and understand the franchise system well.

Essentials regarding existing franchisees

It is imperative to know what need to be discussed with the existing franchisees.  The article informs about the key areas needed to discuss with the existing franchisees. Read below:

  • Initial trainings: The most essential point to be discussed with experienced franchisees is the initial training provided to them. Moreover, it should be brought into light whether the franchisor had provided all the facilities promised to them during the franchise deal. Aspirants need to know the positive as well as negative aspects of the training provided.
  • Support system: Franchisors also support his franchisees in site selection, lease negotiation, securing loans, setting up the outlet etc. Find out whether the existing franchisees are satisfied with the support system of the franchisor in these areas.
  • Franchise fee and investment: Try to learn about the investment and franchise fee from the existing franchisees. This includes franchise fee, marketing expenses (including local level marketing), stock expenses, outlet infrastructure etc. Do enquire about any mistakes that have cost them heavy. 
  • Marketing support: Almost all franchisors provide marketing support to their franchisees. The existing franchisees should be asked about the advertising and marketing assistance they received from the franchisor. They should be enquired about the marketing expenses as well.  
  • Discounts assistance: While seeking information from existing franchisees, inquire whether franchisors provide any help in getting discounts for supplies from the vendors. This enables franchisees to get discounts in their stocks, which otherwise is impossible. Such assistance can provide a great impetus to franchisees to stay in a franchise system.
  • Relationship with franchisor: The most important factor to consider before taking a franchise is the relationship that the existing franchisees share with the franchisor. Do they find the franchisor supportive, caring and helpful or they have grievances against him. If a franchisee is not happy with the system, try to find out whether the system has any loophole or the franchisee himself is not capable enough to achieve his goals.
  • Time of break even and profits: Last but not the least, existing franchisees should be asked about the return on Investment (ROI) that they have achieved. Moreover, information regarding their present profits should also be assimilated before investing in that particular franchise.

Considerations to be kept in mind

While taking the list of existing franchisees from the franchisor do not be satiated just by talking to only few of the successful franchisees of the unit. Contact a sufficient number of existing franchisees before investing your hard-earned money in that franchise. Also, if there are a few unsuccessful franchisees who are not making profits, try to find out the reasons for this. For the aspiring entrepreneurs franchisors who are not keen on sharing the contacts of his existing franchisees, should never be considered.

To conclude, do not ever be satisfied with the franchisor’s rosy picture about his franchise. Rather, existing franchisees are the only key to provide a complete image of the franchise of your interest. Avail the information from these franchisees to attain success.

Related: Steps to secure intellectual property rights

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