Good Franchise – Towards a Franchise Quality charter.

We will shortly be producing a franchise quality charter for what we consider makes a good franchise.

It is a fact for example, that too many businesses rush into franchising long before THEY have proven the concept of the business either for themselves or for franchisees. Some copycat another business and then hope for the best. Too many start franchising JUST to make money out of starting a franchise.

It is an equal fact that half of the franchises go out of business within the first five years, taking all hands with them, and the livelihoods of franchisees.

We think those two facts are linked.

So the first thing we want to see in a good franchise charter is that PROOF forms part of the contract.

So That EITHER

1/ The company ITSELF has traded very profitably for at least three years, and those accounts are available to any would be franchisee under a simple non disclosure without any deposit paid.

The word ITSELF is important. If they bought the business to franchise, it does not mean they know how to run it! – So changes of management beware.

2/ A statement is made regarding adjustment of those company accounts for the costs of franchisee fees that any franchisee would have to pay – so that apples can be compared with apples – and also statements are made comparing the size and demographics of the original business with that of a franchisee

OR ALTERNATIVELY

At least THREE franchise pilots run by people NOT connected with the original franchise have at least three years profitable trading, and those accounts are released to any prospective franchisee, under a simple non disclosure agreement.

AND PREFERABLY BOTH.

The most successful – ie lowest failure rate – franchises are at least ten years old and that is a fact.

AND IN EITHER CASE, AND ABOVE ALL ELSE

The accounts above are warranted as a true and fair representation in the franchise contract. No more weasel words.

Onerous? Not at all – assuming the business works!!

No!! – A good franchise has proof, and is willing to give it to franchisees!

In subsequent posts we will expand on our good franchise charter.

But whilst we are on the subject of accounts – There is something else to look out for…see below!

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