Procedure for Selecting Franchisees

Franchisor Checklist - Potential Franchisees

Sales of franchises should be made by a set procedure of which an example is set out below. While this is a general guideline, individual franchisors will have their own specific procedures and methods to select their franchisees.

However, by following the below steps, business owners are giving themselves the opportunity to ensure that they choose the franchisee that will best fit with the company's standards and practices.

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The 14 Steps

1. Initial telephone response from franchisor establishing personal contact. No information disclosed.
   
2. Dispatch of franchise pack including franchise application form.
   
3. Receipt of completed form followed by assessment of information provided.
   
4. (a) If reply indicates that the applicant is worth investigating further, personal contact is made again to arrange interview and visits to the franchisor's existing outlets.
   (b) If reply indicates that the applicant is unsuitable, he or she is advised that the process will not be taken further.
5. Prospective franchisee is interviewed by the franchisor's assessment panel which may be comprised of the franchise manager, a property specialist, the sales manager, the technical manager and/or other relevant divisional managers, depending on the type of franchise operation.
   
6. Establishment of franchisee's financing requirements.
   
7. Signing of confidentiality agreement and payment of deposit by franchisee.
   
8. Disclosure by franchisor of confidential information to enable franchisee to prepare a business plan.
   
9. Introduction of franchisee to funding sources.
   
10. Evaluation of available sites/properties in proposed territory.
    
11. When sufficient funding is raised by the franchisee, the franchise purchase agreement is signed and the balance of the initial franchise fee is paid by the franchisee.
    
12. If the franchise business requires a site, it is acquired and the lease is agreed. The franchisee works with the franchisor on converting the property to the style of the franchise.
    
13. Franchisee participates in training programme.
    
14. If the franchisee passes the training and is judged suitable by the franchisor, the franchise agreement becomes effective on completion of refurbishment of the franchise unit.