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Printed from the Franchise New Zealand Website - www.franchise.co.nz
< How to Franchise Your Business : Using a Consultant
Choosing a Franchise Consultant
David Pearson
If you have a successful company, you might well like to expand it further. You might have been told by a consultant that you should franchise it. But what if he wants a lot of money upfront to prepare the franchise package? How can you how tell if he is reputable and that the work will be useable?
Let's first discuss why you would consider using a franchise consultant to help you franchise your business. There are three main reasons: time savings (you don't have to go through a learning curve); benefit of experience (knowing what works and what doesn't); the impact on your business (downtime is minimised). A good consultant will save you time and money overall by having 'been there and done that' many times.
The costs involved in establishing a franchise are considerable, so it is crucial when engaging a consultant to choose carefully. Listed below are some key matters to consider when engaging a consultant.
- Do you feel you can 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.
- 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 - how good was it?
- Find out what reputation in the industry the consultant has by asking other industry people.
- If the consultant is a member of FANZ they must comply with a strict code of practice. If they are not members, find out why not.
- Obtain a detailed written proposal for work which sets out what work will be done, when, how much it will cost, a time frame for completion and when payments are required.
- Obtain more than one price and proposal and understand the differences between each. 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.
- Avoid large upfront payments and deals which do not provide the 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.
- Be wary of deals with small fees but requiring success payments upon the sale of franchises. You are engaging a professional advisor, not an entrepreneur. It's okay to have some element of risk sharing, but deals with a large sales component can create an environment for cutting corners and a less than professional approach to the work of creating an ongoing successul franchise.
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