Category Archives: Blog

4 Questions Franchisors Should Ask When Vetting Franchisees

When established franchisors get inquiries from would-be franchisees, the usual course of action is to schedule a phone call. A conversation allows both parties to determine if the potential for a long-term partnership exists.

This initial step of the vetting process is crucial, as no franchisor wants to invest time, energy and resources in a franchisee who isn’t a good fit for the franchise system. But beyond adequate capital to start up the business and keep it afloat until it becomes profitable, what should franchisors look for in franchisees?

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Every franchise system has unique considerations, but when vetting franchisees, franchisors should make sure to ask the following questions.

No. 1: Why Are You Interested in this Franchise System?

Franchisees have their choice of several thousand brands and many different industries. Asking why their particular franchise is of interest can help franchisors identify strong candidates. Prospective franchisees who are gung-ho about the brand — rather than just the potential payout — typically make the best partners.

No. 2: How Hard Are You Willing to Work?

For new franchisees, 60-to 70-hour weeks aren’t uncommon. Operating a franchise in the first years takes a great deal of hard work, so franchisors should try to weed out any prospects who aren’t ready, willing and able to invest a significant amount of time and effort toward business success.

No. 3: Are You More of a Leader or Follower?

The ideal franchisee is a bit of both. Franchisors should look for people with the leadership skills to run the business and achieve profitability, but who are also capable of following the proven franchise system. Prospective franchisees who are likely to provide ideas for operational improvements are welcome, but franchisors are wise to avoid partnering with anyone who seems too entrepreneurial.

No. 4: What Are Your Long-Term Goals?

Often, the owners of the most successful franchise locations have been at the helm for years, and their performance is directly related to the expertise they gained over that time. For that reason, franchisors should look to partner with people who want to stick with the franchise for the long haul. If a prospective franchisee says they have a goal of building up the business and selling for a profit, that may be reason enough for a franchisor to take a pass.

With every new franchisee partnership, franchisors take a risk, which is why the vetting process is so important. Thoroughly assessing candidates and turning down any who don’t meet the qualifications is essential.

For expert guidance on franchisee selection and franchise system development, turn to the award-winning professionals at the Franchise & Business Law Group. Our attorneys have decades of experience working with franchisors, and we can help you achieve your business expansion goals.

With the Franchise & Business Law Group on your side, you can count on practical, forward-thinking advice that puts you on the path to success. For more information, or to schedule a professional consultation to discuss franchisor strategies for vetting franchisees, contact our Salt Lake City, Utah, office today.

Should You Franchise Your Business? Weighing the Pros & Cons

Before you take steps to franchise your business, it’s important to consider the pros and cons of this important decision. Franchising can be a successful strategy for growth, but it isn’t the right approach for every small-business owner.

Partnering with an experienced franchise and business law attorney is an effective way to explore your expansion options and decide on an effective course of action. However, before you consult with a professional, it may be helpful to get a sense of the world of franchising.

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Advantages of Franchising a Business

Franchising comes with many benefits. Among the top reasons to consider this expansion strategy include:

  • Minimal capital expenditures
  • Potential for rapid growth and increased profits
  • Heightened brand awareness beyond your region
  • Competitive advantage from tapping into the local knowledge of franchisees

In short, franchising can be a low-risk, high-reward method of expanding a business.

Disadvantages of Franchising a Business

Being a franchisor isn’t all smooth sailing, however. The downsides to franchising include:

  • May require a substantial financial investment
  • Requires different skills than those used in managing a small business
  • Offers less direct control, as franchisees operate as independent businesses
  • Decreases time for day-to-day business operations, as franchisors need to recruit franchisees

However, not everyone considers these factors drawbacks to becoming a franchisor. And in many cases, these challenges can be addressed with careful planning and a legal expert’s input.

Is Franchising Right for Your Business?

If you’re fired up about franchising — and if this growth strategy feels right — you might be tempted to jump right in. Before you commit to becoming a franchisor, however, ask yourself the following questions:

  • Does your small business have a solid history of profitability?
  • Are your products or services unique and in demand?
  • Do you have the financial resources to build a franchise system?

When you can honestly answer yes to all three questions, the next step is to meet with trusted advisors such as your CPA and an experienced franchise attorney. Be sure to look for a lawyer who fights for the rights of franchisors. A lawyer who mainly works with franchisees may not understand all the potential legal pitfalls for new franchise system owners.

With decades of experience working with new and long-term franchisors, the award-winning professionals at the Franchise & Business Law Group offer forward-thinking, client-centered advice to help small-business owners achieve success.

For more information on the Franchise & Business Law Group, or to schedule a consultation to discuss whether you should franchise your business or consider an alternative growth strategy, contact our office in Salt Lake City, Utah, today.