Monday, February 22, 2016

Quality Important in Selecting Franchise System

So I have not posted much lately because I was in Paris for a family vacation. OK I know that is not a good excuse but we all need some down time! As a consolation for my absence from the blogosphere, here is one of my best photos from Paris!

But we are back to business and I came across an article published by BlueMauMau that reports on a study conducted by Study: Bottom Quintile of Franchisors Churn Franchises Three Times More than the Top.

"Churn" is the turnover rate for terminated franchisees - and the article indicates that: "The bottom 10 percent of bad franchisors have more than triple the churn of franchised stores from franchisor terminations of stores and ceased operations by franchisees than the top 10 percent, according to a 5 year research of Franchise Disclosure Documents by" This is a significant difference and one that all potential franchise buyers should take into account when deciding on a franchise system.

As a franchise attorney, I see many questionable franchise offering and implore clients to conduct thorough due diligence! There are too many ways to lose your money out there ... and while many systems ride the wave of "franchising is great," not all of them are successful and some do quite poorly.

Protect yourself - get a Franchise Disclosure Document, work with knowledgeable counsel, read some books about buying a franchise (like mine), and check out grading services like The Franchise Grade® Top 500 list - these are all low cost ways to conduct due diligence. Do not make up your mind until you have ALL the information.

Quality is important.

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