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Apr122022
OWNERSHIP

Franchisor Support – What to Expect When You Buy a Franchise

Buying a franchise provides many benefits, and the support and backing of an established brand is one of the biggest. However, it’s important to note that the level of franchisor support varies greatly depending on the industry, size and financial capabilities of the franchisor, franchise type and other factors unique to each franchise system. The support and services you can expect to receive should be clearly outlined in the franchise agreement. In general, look for a franchise that’s dedicated to helping its franchisees achieve success, openly shares its expertise and offers support in a number of areas such as those described below. 

Financial Assistance

Some franchisors offer their own financing programs and those that don’t typically help facilitate the financing process.

One of the most basic ways a franchisor can help is by joining the SBA registry. This expedites the loan process because once the franchise agreement is approved for use it does not need to be reviewed for each franchisee’s application. Another simple way franchisors can help is by providing a bank credit report to your lender. This document contains important details lenders need to make financing decisions.

Franchisors often have a list of creditors previous franchisees have used to secure funding and some have established strategic relationships with specific lenders. Although you must still meet certain standards to qualify, it can be easier to get financing from them. 

Regardless of the type of financial assistance provided, make sure you understand exactly how it will impact you. 

Site Selection and Development

One of the most important elements of a franchise business with a brick-and-mortar location is site selection and development. Some franchisors may select the location for you while others will provide guidance for finding a suitable spot.

Once you’ve found a site, the franchisor will likely need to approve it. After that, you’ll be expected to develop the space to meet the brand’s requirements for things like layout, décor, signage, furniture, fixtures and equipment. All work will need to comply with local building codes as well.

Franchisors typically provide some level of building support. This could range from construction guidance and planning and a list of sources for obtaining equipment, décor and other items you will need to purchase or even include help with the logistics, ordering and delivery of materials.

Training and Operational Methodology

Training is essential for you to learn how to successfully operate your franchise business. At the very least you should receive a detailed operations manual that establishes the rules, standards and specs and defines specific job responsibilities and tasks. Instruction for completing the main processes and protocols and performance and management standards should also be included.

Depending on the business, some franchisors provide extensive training that may be conducted in a classroom setting, at corporate headquarters, an alternative training facility or on-the-job. Some franchisors may also provide pre-training modules on their intranet or require franchisees to complete classes and obtain certifications from third parties.

Keep in mind that although the cost of training is usually included in the franchise fee, you will be responsible for travel and lodging expenses.

Ongoing Support

When you buy a franchise, you will likely be assigned a field support consultant whose role is to help you improve the performance of your business and ensure you are adhering to the brand standards. Assistance with supply chain management, training on new products and services and marketing support is typically provided by headquarters staff. Administrative and technical support as well as guidance for handling employee issues, insurance requirements and other operational matters is often provided as well.

Franchisors also typically have regional meetings or system-wide conventions that allow you to meet with the franchise management staff, fellow franchisees and vendors. These events are helpful for networking, learning about new developments and receiving advanced training. In addition, many franchise systems also have an intranet or internal communication system to make it easier for franchisees to share advice and learn from one another.

Advertising and Marketing

Effective advertising and marketing are critical. The best franchise brands initiate corporate funded campaigns to drive brand awareness and assist franchisees with their local efforts.

The franchisor should provide guidance and assistance with the grand opening, market introduction and initial promotion of your location. During the term of your franchise agreement, you may be required to do a certain amount of individual advertising or collectively advertise with other franchise locations in your market area. Most franchisors also require their franchisees to contribute to a brand advertising fund that is used to support marketing efforts for the entire franchise system. The amount you will need to invest will be specified in the franchise contract.

Before you buy a franchise business, it’s important to ensure you understand the support you can expect to receive. Keep in mind if a certain element of support isn’t mentioned in the franchise agreement, it’s likely not included. It’s also a good idea to talk to fellow franchisees in the network to find out how effective the franchisor is in providing the support it promises.