Why Should You Assess the Franchisor Before Purchasing a Resale

It isn’t enough to just find a resale franchise, read its prospectus of sale, and contact the franchisee. Just as with buying a new franchise, you need to assess the franchisor and get a firm understand on how the business runs and if it will be successful. There are many things you want to find out about the parent company, but here some of the major things you’d want to look at.

Their Business History

Any franchise must first run as a single business first before it can franchise itself. The reason for this is that it must first prove that it has a business model that works.

The core of franchising is replication of the same format on a grand scale. The company must determine if its business can be replicated by first running a pilot franchise for a year. If they have not done these things it could be a bad sign.

The Board of Directors

Successful franchises are run by experienced business people who know how franchising works. Look into the backgrounds of the people running the company to see if they have what it takes.

Solid Support Systems

One of the reasons why franchising is such a powerful business model is because franchisees get access to multiple support systems. Look into what the franchisor provides. There should marketing, technical, and training support available among other things, and they should, ideally, be available 24/7.

The Total Cost of a New Unit

Most franchisors wont put this info on the internet for all too see, although there will be some info such as investment level, franchise fee, and royalties. Inquire to find out about any hidden fees or other expenditures that might not be mentioned elsewhere. It’s important to have a full understanding of what the real cost would be so there are no surprises.

Their Growth Plan

Growth is a sign of a thriving company, but be wary if they seem to be growing too fast. A company with a huge network but not the franchisees to fill it could be becoming too big for its britches. Also, the franchisor should not be growing so fast that it can’t support its own partners.

Market Demand and Competition

Look into who their competition is, and what they do compete. What is their marketing plan, and how much of a demand is there for their products or services? Try to find out if they have anything new on the horizon, and how they are going to market those new things.

The Training Process

The nature of the franchisors training program depends on what the company is, but whatever it is you should be 100 per cent prepared to run your business from day one. A franchise is only as good as the people who run it, so when it comes time to get down to business you must be ready.

These are some of the reasons why you should assess the franchise before purchasing a resale. Take a look and find a great resale opportunity in your area on BeTheBoss.ca Franchise Resales.