Franchises - things to look out for ?

W

Westgolf

Registered User
Messages
333
Hi Everyone,

spotted a franchise recently whilst on holidays, thought it could be worth a look. Have sent the company an email requesting specific information re costs and fees etc. The product is golf related and struck me as some thing I could do part-time initially and maybe expand to full time down the line.

I'm just wondering are there specific issues to consider / look out for when analysing a franchise based project ?

Any / all opinions welcomed

Regards

Westgolf
 
Ask yourself the following questions.

How long has the franchise been operating?

What is the success / failure ratio of its franchisees?

Does the franchise have a unique selling point or a high level of brand awareness that will give you an advantage in your market?

Can you do it as well without the franchise?

Is the franchisors primary income from the sale of the franchise or from the ongoing royalty payments? Thsi will give an indication of his intention to support and assist your businesses growth. You can make this judgement by identifying the roles of his direct employees, if they are all franchise sales, etc then you will know where his focus lies.

Always look for introductions to other franchisees as these will be your allies ewhen bargining going forward and will be quicker to point out the negatives.

Royalty charges, many franchises look for a % of your nett sales as their portion, this can be anywhere from about 3% to about 10%, it is very important that your franchise agreement sets out the responsabilities of the franchisor and what you get for this payment. There may also be a marketing contribution, make sure you are getting something for your money.

How are they going to deliver on their support of your business? especially if the concept is not based in Ireland.

Protect your territory, Make sure that the franchisor can not parachute other franchisees into you area, this should be addressed in the franchise agreement.

If you have some specific questions post them and if I can offer an opinion on them I will.
 
franchises and things to look out for

Hi Number 7, excellent points, thanks indeed, some more info below


How long has the franchise been operating?

Two and a half years as far as I can find out

What is the success / failure ratio of its franchisees?

not disclosed at this stage

Does the franchise have a unique selling point or a high level of brand awareness that will give you an advantage in your market?

unique selling point and also value for money proposition

Can you do it as well without the franchise?

am researching this at the moment, depends on availabilty of relevant equipment and cost of aquiring same

Is the franchisors primary income from the sale of the franchise or from the ongoing royalty payments? Thsi will give an indication of his intention to support and assist your businesses growth. You can make this judgement by identifying the roles of his direct employees, if they are all franchise sales, etc then you will know where his focus lies.

Sale fee upfront plus monthly service fee paid forward, service fee on a set scale
Always look for introductions to other franchisees as these will be your allies ewhen bargining going forward and will be quicker to point out the negatives.

have asked about nearest franchisee to me but no response on this point
 as yet.

Royalty charges, many franchises look for a % of your nett sales as their portion, this can be anywhere from about 3% to about 10%, it is very important that your franchise agreement sets out the responsabilities of the franchisor and what you get for this payment. There may also be a marketing contribution, make sure you are getting something for your money.

awaiting more detail

How are they going to deliver on their support of your business? especially if the concept is not based in Ireland.

Irish based " territory manager" plus internet based support

Protect your territory, Make sure that the franchisor can not parachute other franchisees into you area, this should be addressed in the franchise agreement.

As above, awaiting more specific details
If you have some specific questions post them and if I can offer an opinion on them I will.[/QUOTE]
 
Sounds like you are at the early stages of considering this franchise. The only thing I would comment on from above is the "service fee" I am not a fan of franchises that are unprepared to share in the risk and reward of your business by taking a % as opposed to a set fee, it suggest a lack of faith in their ability to achieve with their brand imo.

Good franchises are great, but as always caveat emptor(spelling?), buyer beware, be exhaustive in your pre purchase research.

Good luck.
 
You must log in or register to reply here.
Back
Top