Checklist for Evaluating a Franchise


The Franchise

  • Did your lawyer approve the franchise contract you are considering after he or she studied it paragraph by paragraph?
  • Does the franchise give you an exclusive territory for the length of the franchise?
  • Under what circumstances can you terminate the franchise contract and at what cost to you?
  • If you sell your franchise, will you be compensated for your goodwill (the value of your business’s reputation and other intangibles)?
  • If the franchisor sells the company, will your investment be protected?

The Franchisor

  • How many years has the firm offering you a franchise been in operation?
  • Has it a reputation for honesty and fair dealing among the local firms holding its franchise?
  • Has the franchisor shown you any certified figures indicating exact net profits of one or more going firms which you personally checked yourself with the franchisee? Ask for the company’s disclosure statement.
  • Will the firm assist you with:

A management training program?

An employee training program?

A public relations program?

Capital?

Credit?

Merchandising ideas?

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Assessing Competitors’ Areas of Strength


  1. Excellence in product design and/or performance (engineering ingenuity)
  2. Low-cost, high-efficiency operating skill in manufacturing and/or in distribution
  3. Leadership in product innovation
  4. Efficiency in customer service
  5. Personal relationships with customers
  6. Efficiency in transportation and logistics
  7. Efficiencies in sales promotion
  8. Merchandising efficiency—high turnover of inventories and/or of capital
  9. Skillful trading in volatile price movement commodities
  10. Ability to influence legislation
  11. Highly efficient, low-cost facilities
  12. Ownership or control of low-cost or service raw materials
  13. Control of intermediate distribution or processing units
  14. Massive availability of capital
  15. Widespread customer acceptance of company brand name (reputation)
  16. Product availability, convenience
  17. Customer loyalty
  18. Dominant market share position
  19. Effectiveness of advertising
  20. Quality salesforce

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

A Retailer’s Value Chain


The value a retailer adds lies in providing more choices, greater convenience, better quality, availability, and lower prices. To do so, it must perform several activities. The first stage of this chain is store operations, in which the retailer must perform four kinds of activities. First, it must make the right choices about the mix of goods that its stores must carry (merchandising). Once the mix of goods has been determined, purchasing must seek suppliers who are dependable, that is, would deliver on time and at good prices. The retailer, on the one hand, must also make sure that it does not run out of items that customers want but, on the other hand, cannot afford to be stuck which inventory that customers do not want. It cannot hold the goods too long either, because doing so also costs money. Moreover, the prices of products such as semiconductors or computers drop so fast that a retailer can loose a lot of money by holding inventory. Thus, inventory management is critical.

 

The second stage of the chain is logistic. The retailer must get the goods from suppliers to the right stores, at the right time, at the right cost. The last stage is marketing. The firm must market itself and its products through its advertising, promotion, and pricing, which is often done with the help of or in alliance with suppliers. In some cases the retailer may also have a service network to repair or maintain products.

 

In performing the activities of its value chain, a firm must interact with suppliers, customers, and firms in related industries. These other firms also have value chains of their own. What we really have, then, is a system of value chains called the value chain system.

 

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight