Before making a final decision and deciding to invest in a franchise, it will be necessary to have as much information as possible about franchises, so as not to have any surprises later on and to ensure the money you invest.
The experts assure you that you are never really able to make a correct decision in the business world, until you know very well the sector to which you will integrate.
That is why in almost every country there is what is called a “pre-contractual information right” for future franchisees; that is, the ability to have all the available background of the brand to analyze whether the investment alternative is the most suitable for us.
Some of the questions you should answer with this information are: Is it what we are looking for, does it meet our expectations, does it fit the chosen sector, does it give us the security to invest, among others.
To be able to do so, the person must have the following information at hand 20 days in advance:
Among these data we find the reason, the company’s address, the share capital, as well as the way it is distributed and the identification of its shareholders. Other important data such as the date it was constituted and started with its chain of franchises, will be available in a review of its history and evolution in the market.
Finally, the structural endowment of the central franchiser and an organisation chart of the franchise department.
Sector in which it operates
The franchiser must inform you about the situation, evolution and perspectives of the sector in which the franchise is developed. Also regarding what is the business concept, its main characteristics of positioning and differentiation from more direct competitors.
Don’t forget to find out what your target audience is, who you will have to address.
Structure and extension of the network
Something very necessary to know if what we are looking for is to associate with a prestigious and successful company is the number of centers, both own and franchised, that manage the chain. Thus, the franchiser must inform you if there has been any store that has had to close, as well as the reasons that caused that failure.
Details of the brand you will be operating under, since an indispensable requirement for franchising a company is to have the brand under which the chain operates granted and registered.
Another element to consider is called “exclusivity box”, that is, the area that will be granted to us to be able to operate your business exclusively. There are also some requirements regarding location, conditioning, surface area and other aspects related to the infrastructure of the premises.
Do not forget: marketing and advertising policies, training and assistance you will receive, initial investments needed and income estimates in months and years.
The main characteristics of the franchise contract are:
+Rights and obligations of the parties.
+Duration of the contract.
+Conditions and causes for renewal.
+Financial obligations that you will have to face as a future franchisee.