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Considering Franchising? DON'T! until you read this

Considering autobody franchising? consider this before you ink!

Consider this before you ink. . .

By: Chris Sheehy - Autobody Consulting Group

As seen in ABRN and Collision Hub

Franchising isn’t for everyone, forewarned is forearmed, so follow these points, and be prepared to ask the tough questions before you commit.

 

• Know exactly what the start-up and reoccurring monthly fees are. Ask for them in writing.

• Are there additional fees for belonging to a regional business group or 20-group? Is participation mandatory?

• Are royalty payments assessed? What’s the percentage?

• Are there additional fees for participating in corporate (the franchisor) sponsored marketing programs, or are all marketing programs/initiatives included within your monthly fees?

• If the franchisor has an insurance and/or marketing department – are there any reoccurring fees to support the initiatives of these departments?

• If corporate insurance programs are available – are you guaranteed placement on any insurance programs?

• What if you elect not to participate in available corporate insurance programs, are you still a good fit for the franchise?

• If facility image branding (re-modeling) is mandated, make sure you know the time frame for compliance and the average cost of re-branding for a similar size facility.

• Are there any mandated fee-based training requirements your business must adhere to? What is the compliance time frame; and approximate cost of compliance - based on your business headcount?

• Are there any mandatory/proprietary software obligations? Additional fees? Potential hardware/software conflicts?

• If part and/or vendor rebate programs exist, what percent of rebates go back to the company and what percentage goes to you? Are rebates paid monthly or quarterly? How are they processed?

• Will your participation (or lack of) in a corporate vendor program (i.e., paint, part, etc…) effect the rebate percent of other franchisees or the franchisor?

• Is there a “suggested” or minimum staffing headcount criteria to qualify as a candidate?

• If any “highly suggested” tools or equipment (such as computer measuring, tool carts, or laser printer) are mentioned, what is the expected cost for this equipment?

• Is participation in an annual corporate conference mandatory? Is any percentage of these fees built into the monthly fee structure? If fees are included, are you reimbursed if you elect not to attend conference, or do you forfeit the money?

• Do you plan on being in the business every day? Some franchisors mandate owner/operators must be on premises every business day.

• Are there minimum net worth requirements for candidate consideration?

• Who promotes your new franchise? If the answer is you do, what are the anticipated costs?

• Is there field support (regional/district service manager) for your business? What is the minimum visit requirement? Will the support staff you are assigned have the credentials and experience to consult on the unique challenges of your business? (i.e. If your business focus is on production, are you assigned a field support member whose strength is administration?) Ask to review the Bio. of your field support staff.

• Lastly, ask how many businesses were added to the franchise system and how many businesses left the system in the past 48 months. Request a current list of all businesses that have left or have been removed within the past 48 months and do your due-diligence by calling on some. A list of non-current franchisees is typically provided within the highly-regulated franchise disclosure document package (FDD – sometimes called a UFOC) – make sure your list is current to the month.

Like any business venture, know exactly what you’re getting into before leaping in.  Before meeting with the franchise delegate, do your due-diligence and be prepared by writing down the important questions you have.  Take the time to review each-one with the franchise representative, your attorney, and your financial adviser.  Good luck.

 

By: Chris Sheehy – Auto Body Consultant at Autobody Consulting Group LLC www.AutobodyConsultingGroup.com

´╗┐Autobody Consulting Group, a business operations, administrative, production, estimating, management, marketing, and social media consultancy serving auto body collision repair businesses and vendors to the autobody industry.

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Comments




  • From: CollisionHub.com


    By: Sara Paxton



    As a professional with significant experience in sales, sales process and franchise sales, these are key for anyone considering franchising or any membership with fees - make sure you ask all of the appropriate questions. Great insight from an industry professional. Nice job, Chris!


    CSheehy, 5 years ago | Flag
  • From: CollisionHub.com


    By: Bill Fowler



    All the points you make are valid ones and points many people probably do not consider when relenquishing control of their businesses to others. It seems to me that one makes the transition from owner to manager and the move is often undertaken out of sheer desperation, with caution being thrown to the wind.



    Thank you for taking the time to develop what can be used as a checklist for one to follow before making such a profound decision.


    CSheehy, 5 years ago | Flag

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