A Closer Look At Franchising

While franchising may seem like a complicated industry at first glance, especially for a prospect new to the industry, taking a closer look can help narrow down the most important issues to consider before entering any franchise system. At Sunbrook Academy, we’ve taken great strides to refocus the efforts of prospects so that each can effectively dig into the information presented to them. Prospective Sunbrook franchisees are enthusiastically passionate about early childhood education, since many have experienced the brand as consumers or have come to learn of the distinct brand advantages through other means. With a business focused on the education of young children, many of these prospects seek out information that justifies their disposition.

As a guide, I am going to share some of the most important, and often overlooked, aspects for prospective franchisees to investigate before taking the final plunge into this industry:

Read the Documents: I often find it disturbing that many franchisors and franchisees comment about how few franchise owners actually read and attempt to understand the FDD, the Franchise Agreement and associated exhibits. A responsible prospect will not only read the FDD and associated agreements; they will also seek-out advisors who can offer comparisons and advice from an objective point of view. As a franchisor, it is equally important to encourage a potential franchisee to fully read and understand the FDD in order to start the relationship out strongly.

Details in the FDD: As cumbersome as some find the FDD, there are important items that speak to the disposition of the franchisor in question. An important thing to look for is how is that agreement enforced? Is it with a heavy hand? Or does the franchisor seek to create and maintain healthy franchise relationships through mutual respect and compromise? There are some clues to these questions residing within the documents themselves, namely the FDD section known as Item 3 – Litigation. That is how often has the franchisor been a party to franchise litigation and under what circumstances. These details offer insight into your future relationship with the franchisor and the franchise system.

Reach Out to franchisees/former franchisees: One of the most powerful tools that prospective franchisees can use is first-hand testimonials from franchisees. Call some franchisees and try to gain insights into the brand in an effort to gain access a full understanding of what being a franchisee really means. Perhaps most importantly, reach-out to former franchisees to inquire about their experience with the franchisor and the system while they operated as franchisees and why they decided to go their own separate way.

These starting points are meant to ensure a successful and mutually beneficial relationship for both the franchisor and franchisee entering the system. Looking into specific details, while researching potential franchise systems to become a part of, will save you a lot of time, and ensure satisfaction in the long run.