Regarding legal feasibility. Business owners tend to ignore the legal aspects of their businesses when discussing them. As a company, you should not make such mistakes, since you are not an individual. You must complete all four steps before signing a franchisee agreement, which are Application Forms, Letter of Intent, Franchise Agreement, and Franchise Sales Pitch. A franchise agreement with incorrect terms and conditions will most likely cause serious problems. With a franchise, you may have to deal with some small, petty issues.

First, let’s look at the application form. A franchisee’s interest in becoming your franchisee is expressed through the completion of this form. Suppose I placed an advertisement on Instagram seeking to establish a franchise in Mumbai. A particular location, say Bandra, receives fifteen inquiries. Do I have 15 vacancies? My preference would be to have two franchises in Bandra, one in the east and one in the west. If you were to receive 15 applications, what would you do? Do you have time to meet 15 people? It isn’t practical to do that because you might have a lot of people just putting in inquiries for no other reason than spam. Just meet with the last five and finalize two.

It is a wise idea to ask them to fill out an application form which should include questions that will help you narrow down the applicants. You will be able to narrow this 15-person list down to the most suitable five candidates by including the appropriate questions on the form.

Therefore, it is crucial that all of the right questions are included in the franchise application form. It is imperative to know their financial, family, and social backgrounds. If you have all this information available, you can filter the franchisees. Do you prefer someone who has lived in Bandra for five years or twenty years? Ideally, it should be a person who stays for 20 years because he has his network or contacts in networking organizations.

If you had a choice, who would you prefer as a franchisee? Take a moment to consider such questions. Think about these questions and include them in the application form. Asking the right questions leads to the right results. As a franchisor, you have the opportunity to select the ideal franchisee. Otherwise, you may end up getting engaged to someone who is not right for you. 

There is one more step that needs to be taken, which is the enactment of the LOI, a letter of intent. Before the signing of the franchise agreement, a letter of intent is generally required. The letter of intent clearly states intent, which means intention, which means I have the intention to purchase your franchise. Why not reach an agreement directly? There are several possibilities. The franchisee may have to arrange finance and decide on the right location for their business. Although interested, the franchisee probably needs some time to streamline these things on the back end. But all of this might take some time.

Now there is the franchise agreement. Describe everything you think could cause a problem between you and the franchisee. The terms should cover branding, logo usage, financial terms, marketing, operations, and operations terms. What if the franchisee does not comply with the agreement, is not able to generate the sales expected, or wants to terminate the agreement prematurely? Exit clauses are likely to be the most critical clauses. Will the company take over the store or can they sublet it? You will have to formulate the terms and conditions in a precise manner to help you develop a successful franchise business model.

As the last point, your sales pitch will either make or break the deal, so be sure you have it nailed down before meeting with your customer. Whenever you call or meet with a customer, this is what they will hear as your opening line. Initially, there may not be complete financial information in the sales pitch. The franchisee’s interests need to be considered before you open the financial and legal cards.


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Refer the complete series below:

πŸ‘‰ Click on the Link  [For Step 1]:FINANCIAL Feasibility:

πŸ‘‰ Click on the Link  [For Step 2 ]:OPERATIONS Feasibility:

πŸ‘‰ Click on the Link  [For Step 3 ]:LEGAL Feasibility:

πŸ‘‰ Click on the Link  [For Step 4 ]:Support to your FRANCHISEE:

πŸ‘‰ Click on the Link  [For Step 5 ]:Marketing Support to FRANCHISEE: