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Business Franchising: Expanding Your Business Business Franchising: Expanding Your Business Special Business Skills Required Special Business Skills Required Screening of franchisees Screening of franchisees A franchised company is only as good as the quality of their franchisees. It is a good investment to retain the service of a professional to assess potential franchisees. They can be found under the heading “franchisee employee assessment” in search engines. A franchised company is only as good as the quality of their franchisees. It is a good investment to retain the service of a professional to assess potential franchisees. They can be found under the heading “franchisee employee assessment” in search engines. Don’t be misled into zealous growth because you find a lot of potential franchisees clamoring for your offering. There are lots of entrepreneurially minded franchise buyers seeking to operate franchised businesses. Your challenge will be to install filters when interviewing potential franchisees so that selected candidates all demonstrate integrity, intelligence, and energy as well as the intention to become active operators. As Warren Buffett has said, “People with integrity are predisposed to perform; people without integrity are predisposed not to perform. It is best not to get the two confused.” Don’t be misled into zealous growth because you find a lot of potential franchisees clamoring for your offering. There are lots of entrepreneurially minded franchise buyers seeking to operate franchised businesses. Your challenge will be to install filters when interviewing potential franchisees so that selected candidates all demonstrate integrity, intelligence, and energy as well as the intention to become active operators. As Warren Buffett has said, “People with integrity are predisposed to perform; people without integrity are predisposed not to perform. It is best not to get the two confused.” Real estate development Real estate development Real estate development plays a key role in franchising. These functions include: Creation of the design and working drawings of stores including equipment and fixtures. Negotiation of store leases in shopping centers or other appropriate locations. Normally the franchisor will be the lessee and the franchisee the sub-lessee. Securing building and occupancy permits. Build-out of store premises including fixtures and equipment. Participate in store opening process. Real estate development plays a key role in franchising. These functions include: Creation of the design and working drawings of stores including equipment and fixtures. Negotiation of store leases in shopping centers or other appropriate locations. Normally the franchisor will be the lessee and the franchisee the sub-lessee. Securing building and occupancy permits. Build-out of store premises including fixtures and equipment. Participate in store opening process. Site selection is a key factor in the success of a franchised chain. Each business has its own individual site criteria. For example, a donut shop should be on the side of the street going to work and a liquor store should be on the side going home. Through research and experience, you need to create a “Site Model” that will provide a measurable, non-emotional, objective way to evaluate potential locations. Site selection is a key factor in the success of a franchised chain. Each business has its own individual site criteria. For example, a donut shop should be on the side of the street going to work and a liquor store should be on the side going home. Through research and experience, you need to create a “Site Model” that will provide a measurable, non-emotional, objective way to evaluate potential locations. You can create your own “Site Model” by assigning different values to the factors that are most important for your particular business. Then each location can be numerically evaluated and compared against these measurements. The following example form will give you a methodical approach for evaluating the strengths and weaknesses of each potential location. Here are the steps: Evaluate your site location for each factor on a scale of 1 to 10, number 10 being the highest. Decide the importance of each factor to your particular business on a scale of 1 to 5, number 5 being the most important. Multiply the grade by the weight to determine the points for each factor. Add up the points to get a total score. Repeat this process for each site to gain an objective, comparative analysis. Site Criteria Table Factors Grade 1-10 Weight 1-5 Points Traffic count: cars or pedestrians Visibility access Proximity to competition Zoning Parking (include off-street parking) Condition of premises Proximity to customer generators Income level of neighborhood Population density Population age/age range Directional growth of area Area improving or deteriorating Crime/shoplifting rates Availability of qualified employees Labor rates of pay Supplier proximity Terms and rental rates Adequacy of utilities, gas, & water Transportation accessibility Total Points You can create your own “Site Model” by assigning different values to the factors that are most important for your particular business. Then each location can be numerically evaluated and compared against these measurements. The following example form will give you a methodical approach for evaluating the strengths and weaknesses of each potential location. Here are the steps: Evaluate your site location for each factor on a scale of 1 to 10, number 10 being the highest. Decide the importance of each factor to your particular business on a scale of 1 to 5, number 5 being the most important. Multiply the grade by the weight to determine the points for each factor. Add up the points to get a total score. Repeat this process for each site to gain an objective, comparative analysis. Site Criteria Table Factors Grade 1-10 Weight 1-5 Points Traffic count: cars or pedestrians Visibility access Proximity to competition Zoning Parking (include off-street parking) Condition of premises Proximity to customer generators Income level of neighborhood Population density Population age/age range Directional growth of area Area improving or deteriorating Crime/shoplifting rates Availability of qualified employees Labor rates of pay Supplier proximity Terms and rental rates Adequacy of utilities, gas, & water Transportation accessibility Total Points Some things to keep in mind in site selection: There’s no such thing as the “last good location.” Copycatting your most successful competitor’s site criteria can help you avoid making mistakes. If you are building a chain of stores, never sign a lease on your second location until your first location is profitable and proven. It is better to pay fair rent on a great location than pay great rent on a fair location. Don’t rely on leasing agents to make your site decisions. Driving streets and walking neighborhoods is a good way to scout for locations. Some things to keep in mind in site selection: There’s no such thing as the “last good location.” Copycatting your most successful competitor’s site criteria can help you avoid making mistakes. If you are building a chain of stores, never sign a lease on your second location until your first location is profitable and proven. It is better to pay fair rent on a great location than pay great rent on a fair location. Don’t rely on leasing agents to make your site decisions. Driving streets and walking neighborhoods is a good way to scout for locations.