Franchisor Checklist - Potential Franchisees
Sales of franchises should be made by a set procedure of which an example is set out below. Individual franchisors will have their own specific procedures.
Receipt of inquiry from prospective franchisee.
- Initial telephone response from franchisor establishing personal contact. No information disclosed.
- Dispatch of franchise pack including franchise application form.
- Receipt of completed form followed by assessment of information provided.
- (a) If reply indicates that the applicant is worth investigating further, personal contact is made again to arrange interview and visits to the franchisor's existing outlets.
- (b) If reply indicates that the applicant is unsuitable, he or she is advised that the process will not be taken further.
- Prospective franchisee is interviewed by the franchisor's assessment panel which may be comprised of the franchise manager, a property specialist, the sales manager, the technical manager and/or other relevant divisional managers, depending on the type of franchise operation.
- Establishment of franchisee's financing requirements.
- Signing of confidentiality agreement and payment of deposit by franchisee.
- Disclosure by franchisor of confidential information to enable franchisee to prepare a business plan.
- Introduction of franchisee to funding sources.
- Evaluation of available sites/properties in proposed territory.
- When sufficient funding is raised by the franchisee, the franchise purchase agreement is signed and the balance of the initial franchise fee is paid by the franchisee.
- If the franchise business requires a site, it is acquired and the lease is agreed. The franchisee works with the franchisor on converting the property to the style of the franchise.
- Franchisee participates in training programme.
- If the franchisee passes the training and is judged suitable by the franchisor, the franchise agreement becomes effective on completion of refurbishment of the franchise unit.