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Assessing the Business Type

Franchisee checklist - assessing the business type

The franchise Yes No
1. Is this a genuine business format franchise? (It could be a product distributorship or agency which is not really a franchise but is promoted as a business format franchise and should therefore be treated with caution).
2. Has the franchised business been thoroughly proven in practice?
3. If it is an overseas franchise how successful has it been in its own and other markets?
4. Is there a strong, distinctive trade name associated with the product or service?
5. Is there an awareness of the brand in the country or state in which you want to locate it?
6. Are the franchise's prices competitive and can this competitiveness be maintained?
7. Is there adequate back-up in terms of guarantees and service facilities?
8. Is the product or service new?
9. If there are competitors, has the product or service any distinct advantage over theirs?
10. Are the products produced by a patented method or is the service based on an exclusive process?
11. Is the product/concept defendable, ie how vulnerable is it to imitation and/or competition?
12. Is the source of supply of products or materials guaranteed in the future?
13. Has the product or service and general business concept long-term market appeal or could it be a passing fad or fashion?
14. If the franchise is being newly imported from abroad will it hold a similar appeal in your market? Has it already been tested there?

It is important when you are assessing a franchise operation not to simply accept that financial results or projections from one area will automatically be repeated in your chosen location. A franchise that works well in Chicago or London may not be successful in Sydney or Toronto. Carry out your own market research to satisfy yourself before making the investment.

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