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Doing due diligence before buying a franchise

Those aspiring to go into franchising have to take background checking to heart when looking for business partners.
By Ieth Inolino |
<>The bureau advises that you personally meet the franchisor to make sure the franchise company has an actual office and a set of employees to run the business. It is also advisable to know whether the franchise company is a member of good standing of known franchise organizations.

 

Apart from the technical methods and procedures, the franchisor should have strong business principles and an excellent organization. A future franchise partner should also look for a company that has a good assistance program in providing continuous training and updates to improving the quality of service of the business.

 

For the Galileo Enrichment Learning Program, a Math and English enrichment program for children ages 3 to 12, franchisee training is imperative, says chief executive officer Ma. Rowena Matti. “In Galileo, we conduct a thorough process in choosing partners,” she says. “This process allows us to see if the potential franchisee is genuinely into the business and the advocacy of educating the youth.”

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Fritz Weber, chief operating officer of Specialty Beans Philippines, says that in choosing a franchisor, one should know who are the people behind the company. Aside from managing homegrown restaurant Kangaroo Jack Steak & Grill, Specialty Beans is also the master franchisee of Gloria Jean’s Coffees in the Philippines.

 

“For Kangaroo Jack, we show the business plan to potential franchisees for them to see how fast they could recover their investment. We present to them different business scenarios,” says Weber.

 

Franchising as a partnership

A partnership between a franchisee and a franchisor can only happen when both are on the same page. “One must not just jump into the business—he must look into the history of the company that he wants to be part of, making sure that its reputation is respectable in the industry it is in,” says Matti of Galileo.

 

When someone expresses interest in partnering with Galileo, the company does its own research. They check for financial qualifications to see if interested franchisees have the means to acquire the materials and meet the requirements of setting up a learning center.

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“It is also important to know if our future partners have the credibility in running an education business. This business is about educating the young and it is not an easy task. Promising commitment to the company involves taking full responsibility of their students,” says Matti.

 

It is important that the franchisor and franchisee have the same ideals, Weber of Specialty Beans says. “There’s a lot of ‘getting to know you.’ There would be times that people come and you feel that your personalities would clash,” he says. “If you get into the business together, you’ll have a lot of problems and it becomes a contentious relationship.”

 

In franchising, as in any business relationship, you should choose your partner well. Open communication anchored on mutual trust and aligned values is the key to a successful partnership.  

 

 


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