Franchising 101: How to Evaluate a Potential Franchisor Relationship

Deciding which franchise to invest in can be tricky, especially now there are so many wonderful options out there. When the time comes, knowing how to evaluate a potential franchisor is just as important as being able to review franchise partnership opportunities and their revenue possibilities. Let's find out more about finding the right franchisor for you.

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The franchisor-franchisee relationship is central to the running of any franchise. Get it wrong, and you risk missing out on personal development opportunities, a sense of security and even a feeling of job satisfaction. We've gathered our best franchising tips to give you the tools to judge potential franchisor relationships.

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How to evaluate a potential franchisor relationship

1. Check their track record

Researching a franchise opportunity is a no-brainer; you'd be foolish to go into an investment without thoroughly checking it beforehand. But it can be easy to forget to look into the franchisor's history. They're in charge of leading the franchise, so you should take the time to review their track record and decide whether they're capable of providing the support you need.

Look online to see if there has been any negative feedback from customers or staff. Glassdoor.co.uk allows former and current employees to anonymously review their employers, so it's a great place to get a sense of what it's like to work in the franchise. If your potential franchisor hasn't performed well or developed a positive reputation, you may want to take a step back.

2. Make sure you're comfortable with the franchise agreement's requirements

The franchise agreement can be a good indicator of the way the franchisor likes to do business. It's worth checking every detail of the contract and enlisting the help of a specialist franchise solicitor to make sure you can decode all your future obligations as a franchisee.

Because the franchisor will be committed to achieving consistency across their business network, they're unlikely to be willing to change any significant aspects of the contract (see our guide to negotiating the franchise agreement for more information).

So, it's vital you're happy with your responsibilities before you sign on the dotted line. If you notice a lack of business support or an overwhelming level of supervision, for example, you could take them as signs the franchisor's working style doesn't quite match yours.

3. Look at the fee structure

Reviewing the franchise's fee structure can give you an inkling of the level of support you can expect to receive as a franchisee. So, when you're thinking about how to evaluate a potential franchisor relationship, don't overlook this clever trick.

Franchisors charging high royalties usually provide extensive training and development programmes, which can be particularly useful if you're new to franchising or would like extra guidance. Meanwhile, other franchisors may charge lower fees. In this scenario, you may not receive as much support, which means you might end up having to pay extra for coaching.

Of course, ongoing payments aren't always an accurate indicator of training and support, so we always recommend you investigate the development opportunities further. Ultimately, although you'll want to keep your outgoings to a minimum, it's not worth sacrificing an effective training scheme for low fees, as this could be a false investment.

4. Evaluate their personality and preferred working style

Never go into a franchise agreement without first meeting the franchisor. Franchise exhibitions, discovery days and interviews are all fantastic opportunities to evaluate a potential franchisor. Talking face to face can give you a level of insight and understanding you can't get over the phone or on email.

Try to picture your future franchisor-franchisee relationship and how it might look. Does the franchisor act professionally? Are they respectful, and do they listen to your thoughts and concerns?

At this point, you should consider their personality and attitude. Are they outgoing and can you match their energy? Are they noticeably enthusiastic about your future with their business and keen to support you as you progress? Thinking about these factors should help you find the right franchisor for you.

5. Find out what others think of the franchisor

Although meeting a franchisor will give you a good idea of life in the franchise, there's no way of knowing for sure without talking to those who've already experienced it.

If you don't get the chance to network with existing franchisees at exhibitions or discovery days, ask the franchisor for their contact details. Just make sure they don't cherry-pick particular investors who they know will speak positively about the business.

Ask investors how they feel about the franchisor-franchisee relationship they've built and the support they've received from the head office. You should try to find out whether the franchisor communicates well with franchisees.

Also, have they been able to solve any problems quickly? Do they trust the franchisor and feel respected and listened to? Are there regular opportunities for training and development?

If more than a couple of franchisees have had negative experiences, it's worth doing a bit more research into the franchise.

6. Go with your gut

Often, our instincts are correct, so if you don't feel comfortable with the franchisor, it could be wise to walk away. As a franchisee, you must be able to work closely with the franchise owner and be willing to follow their strategies and rules to the letter.

If you feel your personalities clash or you think you'd find it hard to establish a positive working relationship, we recommend reconsidering your decision. The success of any franchise unit relies on effective collaboration between franchisor and franchisee.

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>> Read more:

• 6 Tips for Recruiting Specialist Franchisees for Niche Sectors
• What Franchisors Look For When Recruiting
• Tips for Recruitment and Selection

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More franchising tips

At Point Franchise, we aim to support new and experienced business owners by sharing the latest industry insights and advice. Find out more about maintaining a positive franchisor-franchisee relationship with our handy guide or browse our latest publications on a range of topics.

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