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Buying A Franchise? Look at company history before signing

Posted: 6/3/2014 07:49 AM by Interim Franchise

You are at that pivotal point. You have done double due diligence. You have scoured the financials. And you are buying a franchise that has a history of determination, sweat and tears, and success. But before you sit in the lawyer’s office and sign away,
take a second look at the history of the brand into which you are placing your life savings. Before you put your time, effort and money into the franchise look under a microscope at the executive team, marketing campaigns, press, presentations and other
documents. Put on your Sherlock Homes hat and find out how the brand started. What are the brand expectations? Remember the past is a predictor of the future. Here is your investigative action plan.

  • Go to the stores or locations and so a mystery shop asking the customers their view of the history of the brand.
  • Go to a clipping service and pull up all the articles about the company, the principals, the investors etc.
  • Go on line and read every comment, article, video that exists about the company.
  • Speak to fellow franchise owners. Call not only the ones that the Company gave to you but others as well.
  • Is there a history of loyal customers? (ask for data from the company to substantiate the loyalty)
  • Does the company have stable leadership? What has been the turn-over of senior level management and why did the leaders leave the company?
  • Historically has the company worked in a positive, productive and profitable manner with the owners?
  • Over the years have the franchise owners had a voice in the decision making?
  • Was there a time then the franchiser backed out on the owners of the franchises?
  • Does the company have a history of providing financial support to the franchisees?
  • Does the company respect and live their mission?

These questions will allow you to find any red flags.  It will show you what to expect in the upcoming years. Yes, there may be a mountain of exciting future plans but it is difficult to overcome even the smallest amount of franchise neglect.  If you
find a franchise that is unable to secure locations, not providing organizational support and has not vision, consider moving on. Once you are sure that the company provides excellent operational and marketing support and lives by their mission you will
feel confident when signing on the dotted lines. After you have kicked the tires and checked the track record and feel confident that it is a good fit …SIGN!