American Association of Franchisees & Dealers:
- Select a franchising company that is primarily interested in distributing quality products and services to ultimate consumers. Although this rule may seem obvious, many (if not most) franchising companies are primarily interested in selling franchises and are less concerned with the quality of the products and services they are theoretically in business to sell.
- Your franchising company should be dedicated to franchising as its primary mechanism of product and service distribution. Be wary of franchisors with a large number of company-owned stores, or who distributes its products through other channels such as supermarkets or discount stores.
- Your franchising company should produce and market quality goods and services for which there is an established market demand. The value of franchising emanates from the value of the franchisor. Too many prospective franchisees cannot qualify for a widely-recognized franchise and settle for a lesser known system thinking the franchise concept is more important than the product and trade name.
- Select a franchisor with a well accepted trademark.
- Evaluate your franchisor’s business plan and marketing system. A well-established, well-designed marketing system promises substantial and complete training and overall franchisee support.
- Your franchisor should have good relationships with its franchisees. Likewise, the franchisees should have a strong franchisee organization which has negotiating leverage with the franchising company. A franchisor who does not permit its franchisees to organize is a sure sign of trouble ahead. Strong franchisee associations, on the other hand, will pave the way to successful and cooperative franchising systems.
- Only deal with franchising companies that provide sales and earnings projections which demonstrate an attractive return on your investment. Do not believe franchisors who claim they are forbidden by law to provide earning projections and evidence of actual performance. To the contrary, all state and federal laws regulating franchising encourage franchisors to provide earnings claims to prospective franchisees.
- Select a franchisor that supports the AAFD’s Franchisee Bill of Rights and agrees to respect these rights as they apply to your franchise.