Mechanical Franchise

When creating a franchise program, you must decide some major variables very early on.  This franchise analysis is commonly referred to as the business plan.

The key to a good franchise analysis is setting the franchise correctly from the start.  If you set the franchise fee too high, or too low, it could have lingering effects on the franchise program.Drafting franchise documents require that you examine many factors.  Where is the competition?  How successful are they?Is your business unique and able to stand out from the crowd?

If you are charging a fee that is higher than some of those in your industry, what do you offer the franchisee that the other franchisors do not?  Is it the return on investment?  Is it the exclusive territory that is larger than the competition offers?  Is it simply a step up in terms of technology or décor?  If it is that the return on investment is greater, you need to make sure that this is addressed.  Formerly known as earnings claims, Financial Performance Representations are now the standard in the franchise industry.  A standard franchise analysis will tell you if it would be worth it to tell potential franchisees what they can make if they follow your plan.

There are some risks involved with financial performance representations as they become part of the Uniform Franchise Disclosure Document.  Issues could arise at a later time where the franchisee doesn’t do the type of numbers that you said they could.  It is up to you to decide if you need to disclose these numbers.Is it a neccessary part of your franchise package?

It is important to take a look at what you have.  Know what you are selling and how to sell it.  You don’t want to offer too much, too early.  As a franchisor, it is better to under-promise and over-deliver.  A good franchise analysis will help you determine what you are doing right and what you could be doing wrong.