Q: In your decades of industry experience, how can you tell if a new franchisor
will likely succeed in the business?
During this phase, the franchisor
and franchisee know what to expect from each other.
No reputable franchisor
would encourage a franchisee to invest 'every last cent' into any business, and no professional advisor would suggest that they do so.
That common understanding is that a franchisee is responsible for all employment decisions regarding employees of the franchisee, and the franchisor
has no interaction with or authority over the franchisee's employees.
Although it is reasonable that those requirements set by the franchisor
are utilized just to ensure that the franchisee's operation will be successful to promote the brand, not to demote the brand, for the franchisees to adhere to these requirements could be a painful commitment.
As you consider a franchise, the franchisor
should provide a prospectus which answers all the basic questions.
Consistent content management is administered at the franchisor
level and user access can be permitted or prohibited at the franchisor
While the new roles reduce the number of adjustments a typical franchisor
will likely be required to make to satisfy state regulators, adjustments will still be necessary, in many cases.
It is therefore critical that a franchisor
carefully analyze its human resource needs and develop a comprehensive system for attracting and selecting people who possess the qualities needed to achieve success in the franchised business.
will help secure financing for qualified candidates to get started, and if they don't provide the financing themselves, often they can recommend an independent firm that provides loans.
In 1995, some 20 franchisor
and franchisee representatives attended a workshop in Minneapolis.
First, the public policy underpinnings of franchisor
liability are presented and critically examined.
i) in which goods or services are sold or offered for sale or are distributed under a marketing or business plan prescribed in substantial part by the franchisor
or its associate;
To serve the franchisor
the accountant should be familiar with key aspects of the franchise program and governing regulations.
Key elements of the FDD / UFOC report include the full franchise agreement as well as extensive discussion of franchise fees, capital requirements, ongoing royalty and marketing expenses, financing options, site selection requirements, site build-out costs, training programs and costs, current and projected franchisor
and franchisee-owned units, franchisee listings and contact information, franchisor
historical financial performance, earnings performance (for franchisors
supplying Item 19s), outstanding lawsuits, franchisor
bankruptcy filings, and key executive biographies.