WHEN TO SAY NO TO A FRANCHISE
by Win Robinson

Franchising can and should provide an enjoyable and profitable journey for both franchisees and franchisors, alike. Unfortunately, this is not always the case. Accordingly, we have compiled the following check list for prospective franchisees to consider when evaluating a franchise opportunity.

When to say no:

• When [for New Zealand franchisors] it is not a member of the Franchise Association of New Zealand
• If the franchisor is willing to change the franchise agreement just to make the franchise sale. (Preferably, agreements should be the same for all franchisees)
• When your independent enquires of existing franchisees reveal discontent between franchisees and franchisor
• When there is no comprehensive operations manual or set of manuals either in hard copy or intranet form
• When the disclosure document does not give you a full and detailed background of the franchsior and the franchise system, its financial accounts, its operating trends over the years, its directors and senior officers and a plain English precis of the franchise agreement's main points
• When you don't feel comfortable that you could work happily with the franchisor
• When there is no procedure by the franchisor to ensure that you have the right qualifications and attributes to qualify to become a franchisee of the franchise system
• When prior to purchase you realise that after purchasing the franchise you do not have sufficient money or borrowing power to supply the working capital to operate the franchise comfortably
• When your wife, husband or partner are not totally happy for you to purchase the franchise
• When you are not allowed to visit a franchisee to get an idea of how the business operates and what that franchisee thinks of the system, the business and the support of the franchisor
• When the franchisor cannot satisfy you that they have taken proper steps to fully prepare the business for franchising in a sound and professional manor
• When there have been unsuccessful franchisees in the business and you cannot obtain a satisfactory explanation of why they failed

> Return to complete article list