Franchising is a golden opportunity for anyone who wants to invest in their own business but has limited resources, know-how, and time. By getting a well-established partner in your chosen industry, you can skip the tedious process of building your business from the ground up and go straight into the big leagues. 

When you read it like this, it sounds easy, but it takes a bit more effort before you start your business. One of the key choices you will have to make is to choose your partner – your franchisor. This often proves to be much more complicated than building your business afterwards. However, selecting the right franchisor may be the difference between skyrocketing your business endeavour from the very get-go and being just afloat until you decide to sell your business and salvage what you can. 

There are many red flags that bad franchisors raise during your initial communication. However, we wanted to help you not just avoid the bad partners but also find the perfect franchisors and align with them. That’s why we created a list of 5 crucial points you should look for when choosing a franchisor for your future business endeavours. 

Table of Content
Table of Contents:
  1. What are their core values and do you share them?
  2. What are the benefits they offer and are they relevant to your needs
  3. Are they honest with you from the very get-go
  4. How reliable is their business model
  5. Are they industry leaders?

1. What are their core values and do you share them

A franchising business can look outstanding on the outside with a fantastic website, breathtaking copy, designer logo and impeccable services and products. However, these franchising companies would be shallow and burn out just like a bright flame if it weren’t for their core beliefs. A business is just as valuable as its values, mission and goals. If the company’s mission is to earn money, that’s not really something it can rally people. 

A great franchisor (and business) is interested in a lot more than just plain profits. They have a mission to make their industry, their community and the whole world better. However, it’s not enough to just have it written somewhere on their website’s “About Us” page. Instead, they have to show their resolve to follow through actively. 

For example, one of the core values of Fantastic Services is to provide sustainable services. That, however, are not simply words for marketing purposes, but the company actively tries to reduce its carbon emissions and has vowed to reach carbon neutrality by the end of the decade. In addition, it actively urges its partners to go green and implements strict eco-friendly products to be used by all its franchisees.

To determine whether a franchisor is mission and value-driven and not just profit-driven, you need to dig a little deeper into their history, current operations, and what the community thinks about them. Thankfully the internet is filled with information. Look for articles, interviews, and any other information that may give you a clearer picture of your franchisor’s primary motives.

2. What are the benefits they offer and are they relevant to your needs

When looking for a franchisor, you are actually looking for support to achieve your business goals. That’s perfectly understandable, so you really need to focus on the benefits you will get from the franchisor. The symbiotic nature of your cooperation dictates that you need to get just as much value from your partnership as the franchisor will get from you. 

Most franchisors offer immense benefits. They are ready to share all their resources in the name of expanding their brand through your hard work. That’s perfectly understandable, but you should ask yourself whether they offer the right benefits for you. For example, if you struggle to find leads, yet the franchisor doesn’t provide help in this regard, then you might want to look elsewhere for the specific support you need. 

Furthermore, a good franchisor always provides training to their franchisees. However, only the great franchisors offer ongoing training, which continues even after the franchisee has become well-established. That comes to show that the franchisor is really invested in your prospering. 

One thing that should be noted is not the sheer amount of benefits the franchisee receives by signing up with a franchisor but the support quality. To determine it, you should consider the franchisor’s resources, like manpower, technological solutions and their investment in automatization. 

Finally, you should talk to existing franchisees and ask them about the positives and, more importantly, the negatives of the franchise. Franchisees are typically inclined to support their franchisors, but by conversing with them, you can easily determine where are the weak points (if there are any) of a franchisor.

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3. Are they honest with you from the very get-go

Honesty is a cornerstone of any partnership, and you should insist your chosen franchisor be always honest with you. Unfortunately, it’s not easy to determine whether someone is sincere with you from the very get-go, and you need to invest some time into researching that aspect of your partnership. However, before you sign anything, you need to be absolutely sure that the franchisor is genuine and will not withhold any information that might concern you. 

If something a franchisor offers you sounds too good to be true, it most likely is. If they promised you they would take care of everything, and all you need to do is sit there and take the money, that should be an instant red flag. As mentioned above, the relationship between a franchisor and a franchisee is symbiotic, so why would they do all the work and give you the profits. 

Insist on the truth. If you are serious about your investment, you need to know exactly what your responsibilities will be, how much freedom you will have and most importantly, what the financial aspects of your endeavour will be. In addition, it’s best to know how long it will take for your business to become self-sufficient and how long it will take to return your initial investment.

4. How reliable is their business model

The business model is probably the single most crucial aspect of your partnership agreement. It allows you to skip the long and painful trial and error period in every business upbringing. It’s much easier to copy the model a highly successful company has done, and that’s precisely what franchising is. 

However, not all franchisors have a successful business behind them. You, as an investor, should check the franchisor’s background, how its business model allowed them to thrive and how fast they became relevant in the market. A great sign of success is to have other franchisees already prospering with this model.

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One of the few bonuses of the post-covid era we live in is the ability to see precisely how good a business model is during a crisis. Naturally, depending on the industry, the franchisor’s profits would have decreased, but what matters most is how quickly they recovered after the initial blow and how fast they adapted to the new realities. 

This shows the true potential of the business model and should not be ignored when choosing a franchisor.

5. Are they industry leaders?

Finally, you’d want to align with a progressive, well-established and highly-motivated industry leader. And that’s completely understandable. Why choose anyone but the best as your business partner. 

Finding whether the franchisor is a business leader is actually easier than most other things. All you need to do is check for their social and authority proof. If they are mentioned in high-end news outlets, have their owners as frequent guests in interviews or talk shows, and are revered by the community, they are probably industry leaders.

 A great sign is for them to have at least one award. Typically franchisors who have awards will make sure to show them. So whether they are on their web page, in their brochures, or anywhere else, you will know about it if the franchisor has been awarded. 

If the franchisor doesn’t have an award, it doesn’t mean that they are charlatans, but instead that they still haven’t earned the recognition of their peers.

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Choose your franchisor carefully

When it comes to franchising, your choice of the franchisor will determine how much your hard work will be amplified. It’s the single most important step in determining your journey as a franchise business owner. A good franchisor will make sure you will become profitable as fast as possible and help you expand further as time goes by. After all, the symbiotic relationship dictates that the more successful you are, the more successful you will be.

  • Last update: May 23, 2022

Posted in Industry Insights