How a Franchise Agreement and a Franchise Disclosure Document differ
There are two documents that are of vital importance...
With these unprecedented times upon us, there's no doubt there has been a shift in what prospective Canadian franchisees are looking for. Right now, as you look for a Canadian franchise, you're probably thinking about adaptability. How well are the brands you are considering adapting to the rapid changes we're seeing today, and how well may they continue to do so in the future?
While there's no handy crystal ball here to get you a definitive answer, you can answer the following questions about the franchisors you're interested in to get a clearer idea.
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How old is the brand?
Naturally, the older a brand is, the more adaptable it is--after all, how else did it survive this long? Of course, this doesn't mean a newer concept won't have adaptability built into its system, but brands that have already weathered multiple changes in industry, recessions and shifts in consumer tastes are often more experienced in handling storms.
Ask your franchise rep how long the company has been franchising. An older brand that is newer at franchising isn't the same as a newer brand that's been in franchising longer. Keep an eye on brands that are more experienced in rolling out system-wide improvements and scaling their models.
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How long do franchisees stay put?
Find out how long franchisees tend to stay with the brand. After all, you want a brand that is able to support its franchisees over the long term.
To get this answer, you will probably have to ask your franchise rep more than one question, including how long the oldest location has been open, the term of the franchise agreement and whether that term is standardized for all franchisees. Ask what percentage of franchisees sign another agreement after their first term is up. The answers you get here will shed some light on how well the brand adapts to support its franchisees over the long term.
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What types of changes have been made in the system?
No one gets it all right on the first try. That's why you want to see an adaptable franchise with a history of beneficial change, one that isn't afraid to try new things and correct inefficiencies. Talk to your franchise rep about recent changes the franchisor has made and other significant changes that have been made in the past. Ideally, you want to see a history of improvement that hasn't sacrificed any of the brand's core values.
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