Our Franchise Consultant Gives You 9 Must Read Tips For Selling Your Franchise
Got a cool concept and a system that’s running like a well-oiled machine? Thinking of taking it to the next level and becoming a franchisor? To help get you started right, we turned to franchise consultant Peter Casey of Capital Franchise Group for his expert insights. Before you sell your first franchise, check his list of tips:
- Be willing to make several face-to-face visits. The person buying into your franchise is buying the relationship and your personal experience. Since yours is not a major franchise system, it’s more important to focus on the extra attention and the support that you’re going to provide.
- Offer a bigger territory. People buying an unestablished franchise system are going to be naturally reluctant. You need to give a lot more than you will for your second, third, and fourth deal. Their commitment to you is based on trust; prove your commitment to them by sweetening the pot.
- Be patient. The process will take a lot longer in the beginning because people are going to want to spend more time and work through more issues.
- Don’t break the law. Get familiar with the rules that are in place, especially regarding earnings claims. If you think selling your first franchise is hard, it’s incredibly hard selling your second or third when the first one sued you.
- Have appropriate partners lined up. For example, a good commercial realtor who is well-versed with your model and willing to assist in the early stages can make franchisees feel good about you.
- Have good marketing materials. Know who your target market is and what they’re looking for in a franchise opportunity. Advertise on different mediums—not just print and not just the Web.
- Consider hiring a franchise broker. Someone who has closed franchise deals before can be a big help. It’s tough to run the store and be a full-time salesperson.
- Hold the bar high. You’ll be very eager to take a check from anyone you can, but as a new franchisor you need to find somebody who’s had business experience.
- Keep it local. Thinking you can support somebody who is in a totally different state at this early stage is unrealistic. Avoid the long distance relationship and start close to your home base.
Franchise Disclosure Document for Dummies – Part 6
The key disclosure in Item 15 states whether the franchise owner is obligated to participate in the direct operations of the franchised business. For prospective franchisees looking for a pure investment rather than a business opportunity, this disclosure might be the first (and only) provision they read in the FDD. Although, an experienced franchise investor may be able to negotiate an exception with the franchisor.
Watch out, Franchisees! 10 Franchisor Red Flags
Only a limited number of states require registration by franchisors, and franchisors are by no means required to register in states where they have no intention of selling franchises. However, if a mature franchisor appears to be consciously avoiding the registration states, this may suggest some level of internal concern about the FDD, the franchisor’s sales tactics, or the franchise system as a whole. The cover pages of the FDD will identify where the franchisor is required to register (and whether it has registered or not), and the charts in Item 20 of the FDD will explain whether the franchisor has ever sold a franchise in any of the registration states.
Can an Adult Franchise be Tasteful?
The brand of adult shop that the newlywed couple launched after returning from a year-long tour of duty in Iraq was inspired by what made them uncomfortable about other adult shops.
