You are probably reading this blog, because you are considering franchising as a business model and want to learn how to go about it. Someone may have suggested that you use a Franchise Consultant. But you may have heard that it costs a lot to develop the franchise system and you want to know if you are getting good value. You may also be concerned that they are reputable and that the work will be done correctly.
So why would you consider using a franchise consultant to help you franchise your business. There are three main reasons:
- You do not know the steps that are necessary and save time by using a consultant.
- The consultant is likely to have a lot of experience dealing with many different types of businesses and has seen what works and what doesn’t.
- You can continue to focus on your revenue generating activities whilst the consultant develops the franchise system.
The costs involved in establishing a franchise system can be considerable, so it is essential that you do your research when engaging a franchise consultant. Listed below are some particular points to bear in mind:
- Can you work well with the consultant? You will be spending a lot of time with them and sharing your secrets of success. A good and trusting working relationship is very important.
- Will you be dealing with the consultant himself or will the work be delegated to other staff?
- Find out and confirm what experience the consultant has had. Ask for plenty of references and follow them up. Ensure you speak to people who have already franchised using the consultant’s advice.
- Find out what reputation in the industry the consultant has by asking other industry people.
- If the consultant is a member of the Franchise Council of Australia they must comply with a strict code of practice. It would be interesting to find out why they would not be members of the peak body for franchising.
- Obtain a detailed written proposal for work which sets out clearly the scope of works, how much it will cost, a time frame for completion and when payments are required. Ask what other specialist work may need to be undertaken by other experts, such as legal, accounting, demographic, marketing, web page development etc. and understand if these costs are included.
- Get more than one proposal and understand the differences between them. The elements and principles of franchising do not differ much between businesses. It is the type and complexity of different businesses which create the differences in the work required. Cheapest is also not always best.
- Be careful to look whether there is an opportunity for termination as a result of non-performance or sub-standard performance. Payments should be structured more or less to coincide with work done, which would typically be over 5-6 months.
- Be wary of business brokers disguising themselves as franchise consultants. Typically they will request low fees to develop the franchise system, but require large success payments upon the sale of franchises. You are engaging a professional advisor, not an entrepreneur. In those circumstances the pressure will be on the broker to provide franchisee prospects who may not exactly fit into the franchise system, just to secure his income. Once the franchise system has been developed by professionals, you can investigate the use of brokers for the sale of franchises.