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What Should a Prospective Franchisee Look for in a Franchise?
Joseph Gottlieb: One of the most important things that are potential franchisee should look at is a management team for the franchisor. Very often in a new franchise system, the management team might be very thin. Ideally in a strong franchise system, there is a strong infrastructure to support franchisees. So, you would like to see at the helm of a franchised system maybe the founder, maybe people with a strong background in franchising and enough people that they can adequately support either the number of current franchisees or the number of franchisees that they reasonably intend to have in the foreseeable future. It’s very important that they’re being a critical mass, some sufficient number of units in operation and that’s important for several reasons.
First of all it’s a good indicator that the franchise has staying power. It will also be instrumental in helping a potential franchisee obtain the validation that they really need to have before they buy. One of the most important things in any franchise system is uniformity. Uniformity of service or the product, so it’s important that the franchisee visit various outlets and that the outlets look the same, that the products or services being offered either taste the same or a presented in the similar way. Of course people get into franchise system because they want to be part of a system that someone will recognize and by virtue of the look of the system or the brand will patronize you or business as opposed to someone else.
So, if that units and the outlets look uniform that’s a good indicator that the franchisor is really protecting and promoting the brand. It’s important of course that are we good franchisee validation. And very, very important is that the financial statements of the franchisor which will be part of the FDD are strong enough. You don’t want to be in the situation as a franchisee, where you're paying a significant franchise fee making a large initial investment and you're actually putting more money in than the franchisor may have in the bank, that’s a bad indication okay. It’s also important that the product or service being offered have some element of uniqueness. If I was entering a franchise system I would want to know that what I am offering is got some appeal that there is a established market for the product or I feel confident enough that the branding of the franchisor will help promote this product if it is a new product of service.
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