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Franchise Focus: Finding a match

Franchise Focus: Finding a match

Posted on: March 07, 2016
Author: ATB Business & Agriculture

Ready to take on a franchise? This checklist will help you find an opportunity that's right for you.

The current market

  • The franchise is well-recognized and respected in the franchise community, proving itself as an established brand with a good reputation.
  • There are numerous franchise locations in Alberta—with more expected—proving that there is a strong demand in Alberta.
  • The franchise is established in the market and has more than 10 years of operating experience.

Investment

  • The minimum investment amount is something that you are comfortable with.
  • Upgrades will be required throughout the term of your agreement. It is important that there is a clear upgrade time period (perhaps every seven to nine years) with leasehold improvement details and support available to you during this time.
  • The equipment is clearly described as leased or owned, and the required investment is within your budget.
  • If the location is leased, you know who carries the head lease and what the lease agreement looks like.
  • The franchisor’s financial statements are available for your review. The stability, soundness and strength of the franchisor can be determined through financial statements.

Franchisor

  • The franchise management team is experienced and stable, able to provide you with the support you need.
  • The franchisor will support you while you find the ideal location and site type (stand-alone, strip mall, food court or office).
  • The franchisor clearly explains whether the real estate is owned by a landlord, the franchisor or you, the franchisee.
  • You are comfortable with the level of support offered. You will be able to meet your revenue goals and keep up with your franchise expectations.
  • The franchisee selection process is fair, thorough, and you understand how and why it works.
  • The franchisor provides a comfort letter and some kind of guarantee so that you feel comfortable making the commitment.
  • The franchisor’s policy on struggling locations is acceptable and you fully understand it.
  • The Franchise Agreement is available and should be reviewed by a solicitor. The franchisor should not rush you to sign it.

Future predictions

  • The expected revenue and profit for the location will be able to sustain your expenses and give you an appropriate return on investment.
  • The franchise growth rate is sustainable given the market and competitors’ growth rates.
  • There is an option to renew the franchise agreement at the end of the first franchise term, should you want to continue operations.
  • The opportunity exists to acquire more locations.

See more posts in our Franchise Focus series:

Pop quiz!
5 tips to success
Q & A with a franchisee
Understanding the FDD
Your support team
Build your empire
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