I was recently approached by a franchise that was looking for help. In my franchise consulting practice, I often get calls from franchise concept willing to expand their systems. The business had five units in the retail industry with good financial performance and happy franchisees; but, they were still struggling because the challenge was either franchise sales, or a lack of sales.
They were willing to review their process and see if my franchise research could be of any help.
I reviewed certain preliminary information, their FDD (somekeyword), and their marketing material. I took interview of different key personnel, their validation process and also social media presence for strategic business planning.
I quickly concluded that we had some raw material to carve a plan before marketing the brand. On the client's request, I made an effective proposal and forwarded it to the client for review. This is what somekeyword services is all about.
It was immediately rejected as not unnecessary information. They stated re-evaluation on their model was not required at all as everything was fine. Their intention was just to SELL, SELL and SELL.
Now, you my not consider there wasn't a problem with franchise system. The franchise was minting money. Their locations were successful and their franchisees were happy. In fact, the client was somewhat held back by the franchise consulting system fees. Not that I cannot be responsive to costs, but I need to make a living. What I found disconcerting was their mindset because of the answer being sales, particularly given a few concerns I had mentioned to them-
The first problem was that their FDD lacked key elements. It did not have all the required disclosures, items and list of franchisees. What this means is the document was unenforceable. While I am NOT an attorney, I did advise them to get it reviewed. If you have an unenforceable document, it will have no value. If a franchise took legal action, they win and the franchise research takes both a financial hit and a blow to the value of the brand.
The second problem was the lack of defined process, no adequate distribution channels for their inventory, no unique selling points and no branding strategy. While they had some brand recognition in their local markets; if they took the system to California, New York and other places, there was nothing to make it stand out or DIFFERENTIATE themselves from competitive businesses. In addition, without a clearly defined system, which is one of the most important benefits to a franchise, what is the value? Why to invest in it?
While somekeyword can mean different things depending on the expertise provided; in this case, it was clear. As this franchise model appeared to be successful, they were not in the position to sell the model. In fact, given the status of the FDD and Franchise Agreement, they were exposing themselves to potential liability.
In this instance, I told the franchise consulting services that I could not work with them in the present situation. While in most cases, sales can solve A LOT of the problems in a business. In this direction, franchise sales would have a negative impact.
As a franchise consultant and broker, I am a big supporter of the franchise concept ownership. If you have a good franchise brokerage system, the resources and skills to succeed, it can be a great thing. Regrettably though, not all systems work and you have to do your research carefully. If you are unsure about something, ask the question. In addition, one should have all agreements reviewed by a qualified franchise attorney.
Author bio: The author of this article has specialization in Franchise Concepts. His enormous experience is summed up in the article -Franchise Disclosure Document brings the master plans for the Franchise Opportunities'. Along with this he also provides somekeyword, franchise development and brokerage services to both individuals and franchise systems.
Read more: somekeyword
No comments:
Post a Comment