Partners in franchising
At the beginning of the buying process, you will work with a salesperson, consultant, broker or vice-president (VP) or director of business development, who is responsible for growing the brand through the sale of franchises. These people reply to submitted requests for franchise information and follow up on applications. They will check on sales leads and evaluate your candidacy.
If your application is accepted, then they will follow you through the buying process, from initial application to closing. (On the other hand, if your application is denied, it is probably for the best. Odds are you are not right for the system and the franchisor is doing you a favour!)
Once accepted, you will be asked to make a good-faith deposit. You will also receive franchise documentation, which you should pass along immediately to a franchise lawyer. In some provinces, this includes a disclosure document. A franchise lawyer can save you thousands in legal fees and time.
You will likely meet the president and/or CEO around this stage, along with the VP or director of operations, who is responsible for creating and implementing standards, policies and procedures for the day-to-day operation of the franchise system. You will have regular contact with this person.
The marketing director is responsible for generating brand awareness and will lead all marketing activities. In smaller systems, these duties might instead be handled by the operations department.
Depending on how large the system is, there may also be area supervisors, as well as an in-house director of real estate. More commonly, a contracted broker assists the franchisor in finding new locations. This service may carry a cost for franchisees, so be sure to ask about this when considering opening a unit.
The indicators of how successful a franchise system is will include how frequently units have been resold, how many franchisees typically renew their agreements or sell their units and how many franchisees are multi-unit operators. These factors will give you an idea about current franchisees’ commitment to growth and whether or not they foresee a future for the system as a whole.
Before the sale, the franchisor will furnish you with a list of franchisees to contact, but you should also reach out to franchisees who are not on the list, including those who have left the system. Ask them about the support they have received from the franchisor and whether or not their franchises have been profitable.
Their answers to these simple questions will be very telling. Some franchisees have a tendency to blame the franchisor for their own faults, so you might take their comments with a grain of salt; but if you consistently hear negative feedback, take heed.