Title: Franchise Sales Are Not The Answer...
Keywords: Franchise Consulting,Franchise Models,Franchise System,Franchise
Brokerage,Business Coaching,Strategic Business Planning
I was recently approached by a franchise that was looking for help. In my franchise
consulting practice, I often get calls from franchise concept willing to expand their systems.
The business had five units in the retail industry with good financial performance and happy
franchisees; but, they were still struggling because the challenge was either franchise sales, or
a lack of sales.
They were willing to review their process and see if my franchise research could be of any
I reviewed certain preliminary information, their FDD (Franchise Disclosure Document), and
their marketing material. I took interview of different key personnel, their validation process
and also social media presence for strategic business planning.
I quickly concluded that we had some raw material to carve a plan before marketing the
brand. On the client’s request, I made an effective proposal and forwarded it to the client for
review. This is what franchise consulting services is all about.
It was immediately rejected as not unnecessary information. They stated re-evaluation on
their model was not required at all as everything was fine. Their intention was just to SELL,
SELL and SELL.
Now, you my not consider there wasn’t a problem with franchise system. The franchise was
minting money. Their locations were successful and their franchisees were happy. In fact, the
client was somewhat held back by the franchise consulting system fees. Not that I cannot be
responsive to costs, but I need to make a living. What I found disconcerting was their mindset
because of the answer being sales, particularly given a few concerns I had mentioned to
The first problem was that their FDD lacked key elements. It did not have all the required
disclosures, items and list of franchisees. What this means is the document was
unenforceable. While I am NOT an attorney, I did advise them to get it reviewed. If you have
an unenforceable document, it will have no value. If a franchise took legal action, they win
and the franchise research takes both a financial hit and a blow to the value of the brand.
The second problem was the lack of defined process, no adequate distribution channels for
their inventory, no unique selling points and no branding strategy. While they had some
brand recognition in their local markets; if they took the system to California, New York and
other places, there was nothing to make it stand out or DIFFERENTIATE themselves from
competitive businesses. In addition, without a clearly defined system, which is one of the
most important benefits to a franchise, what is the value? Why to invest in it?
While franchise consulting can mean different things depending on the expertise provided; in
this case, it was clear. As this franchise model appeared to be successful, they were not in the
position to sell the model. In fact, given the status of the FDD and Franchise Agreement, they
were exposing themselves to potential liability.
In this instance, I told the franchise consulting services that I could not work with them in the
present situation. While in most cases, sales can solve A LOT of the problems in a business.
In this direction, franchise sales would have a negative impact.
As a franchise consultant and broker, I am a big supporter of the franchise concept
ownership. If you have a good franchise brokerage system, the resources and skills to
succeed, it can be a great thing. Regrettably though, not all systems work and you have to do
your research carefully. If you are unsure about something, ask the question. In addition, one
should have all agreements reviewed by a qualified franchise attorney.
Author bio: The author of this article has specialization in Franchise Concepts. His
enormous experience is summed up in the article ‘Franchise Disclosure Document brings the
master plans for the Franchise Opportunities’. Along with this he also provides franchise
consulting, franchise development and brokerage services to both individuals and franchise
Read more: http://sunshineconsultingltd.com