Why Is the Franchise Check Split into Three Parts?

Franchise documents can be lengthy and extremely detailed. They may cover the history and experience of the franchisor, franchisee support, initial and ongoing costs, training, marketing, purchasing requirements, premises, equipment, termination and many other important subjects.

Attempting to cover every issue in a single assessment can make the results difficult to follow and may reduce the clarity of the answers.

To provide a clearer and more accurate review, the Franchise Opportunity Checker divides the assessment into three focused templates. Each template considers a different group of questions, allowing the system to examine the supplied documents in manageable sections and present the findings in a more structured format.

The three templates should be used together where a comprehensive review of the franchise opportunity is required.

Template 1: The Franchisor and Initial Suitability

The first template considers the background of the franchisor, the support network and whether the opportunity appears suitable for the prospective franchisee.

It looks for information addressing areas such as:

• Whether the franchisor is a member of the British Franchise Association
• How the franchisor supports its franchise network
• Ongoing training and business support
• The experiences of existing franchisees
• Whether the opportunity is a suitable financial fit
• Likely initial costs and working capital requirements
• Potential profitability and lifestyle expectations
• Personal interest in and suitability for the business
• How long the business has been franchising
• Whether prospective franchisees can speak independently with existing franchisees
• The composition of the franchise support team
• The franchisor’s history of franchisee failures
• How prospective franchisees are assessed and selected

This stage helps establish whether the franchise and the franchisor warrant more detailed investigation.

Template 2: Methods, Fees and Financial Commitments

The second template focuses on how the franchise operates and the financial commitments associated with joining and running the business.

It searches the supplied documents for information about:

• Ongoing fees and what those fees cover
• Required products, equipment and approved suppliers
• Any commissions received by the franchisor
• Marketing and advertising expenditure
• Franchisee marketing contributions
• Launch promotions and whether they are included in the franchise fee
• Training arrangements and associated costs
• Continuing services provided by the franchisor
• Access to the proposed franchise agreement
• Restrictions affecting the sale of the franchise business
• The length of the franchise term
• What happens when the agreement ends
• The initial franchise fee and what it includes
• Working capital requirements
• Financial projections and the evidence supporting them
• Whether the model was tested through a pilot or company-owned operation
• Assistance with raising finance
• Security requirements connected with finance

This part of the review helps build a clearer picture of the initial outlay, recurring costs and commercial conditions involved in operating the franchise.

Template 3: Your Involvement, Premises and Ongoing Support

The third template examines the prospective franchisee’s practical involvement in the business and the support available once the franchise is operating.

It considers questions relating to:

• Whether the agreement can be ended early
• Termination rights and restrictions
• Point-of-sale material and promotional literature
• Who pays for promotional materials
• Ownership of equipment once finance has been repaid
• Refurbishment and redecoration commitments
• Equipment replacement obligations
• Responsibility for finding suitable premises
• Communication between the franchisor and franchisees
• Franchisee meetings and network communications
• Operating instructions and manuals
• Help available when operational problems arise
• British Franchise Association membership

This stage helps clarify what will be expected from the franchisee and what practical assistance the franchisor says it will provide.

How the Franchise Opportunity Checker Works

1. Gather the documents and information supplied by the franchisor.
2. Upload the relevant documents to the checker.
3. Complete each of the three franchise assessment templates.
4. Review the answers and source references produced by the system.
5. Identify questions that have not been answered fully by the supplied documents.
6. Use the findings to support further enquiries with the franchisor and your professional advisers.

Completing all three templates provides the broadest review. Each template considers a different part of the opportunity, so a finding in one assessment should be read alongside the findings from the other two.

What the Checker Helps You Identify

The Franchise Opportunity Checker is designed to help establish:

• What the franchisor’s documents state
• Whether important questions are answered clearly
• Where information appears incomplete or uncertain
• What financial commitments are described
• What continuing obligations may apply
• What support the franchisor says it will provide
• What restrictions may affect the franchisee
• What additional questions should be raised before proceeding

The checker does not assume that missing information means the opportunity is unsuitable. Instead, it highlights where the documents provided may not contain a clear answer and where further enquiries may be appropriate.

Documents You Can Upload

The checker can be used with relevant documents supplied as part of a franchise opportunity, including:

• Franchise agreements
• Franchise prospectuses
• Franchise information packs
• Disclosure information
• Financial illustrations and projections
• Fee schedules
• Training and support information
• Marketing information
• Equipment and supply information
• Property and premises information
• Operations information
• Supporting contractual documents

Where information is contained across several documents, the relevant files may be reviewed together so that the checker can search for answers across the supplied material.

Who Is the Checker For?

• People considering their first franchise
• Existing business owners considering a franchise opportunity
• Prospective franchisees comparing different opportunities
• Investors examining a franchise proposition
• Operators considering an additional franchise location
• Business and membership organisations supporting prospective franchisees

Important Information

The Franchise Opportunity Checker is an information extraction and document analysis tool. It is designed to identify and organise information contained within the documents supplied by the user.

It does not verify statements made by a franchisor and cannot establish whether financial projections, performance claims or other representations are accurate unless relevant supporting evidence is included within the uploaded documents.

The checker does not provide legal, financial, accounting, investment or business advice. Its findings should not be treated as a recommendation to enter into or reject a franchise opportunity.

Prospective franchisees should obtain appropriate independent professional advice before signing a franchise agreement, entering into a commercial lease, raising finance or making a substantial investment.