This article is written and owned by Lance Winslow
One of the first questions that every franchise buyer asks the salesman of the franchisor they are interested in is how much money am I going to make? The reality is no one can predict that in advance, after all, someone who buys a franchise and then comes to work every day at about 10 AM and leave at 2 PM, and never does much of anything, then obviously his business will fail no matter how good the franchise model is.
In other words, much of the success of any franchise company regardless of the industry or type of business has to do with the business owner’s acumen and hard work ethic. A franchisor knows that a franchisee which does not follow the system, will not have similar results as their other franchisees, often they will make a lot less because they have made some minor modification, and cause the business to be less efficient.
For all these reasons, and probably 10 more good ones, that I won’t list here franchisors are often challenged with the concept of giving earnings claims. That is to say if they tell someone who is thinking about buying a franchise how much money they are going to make, they know that the figure they give cannot be accurate. No matter how much the franchise buyer demands that this information be given, the honest and ethical answer will always be; it depends. And there are so many factors.
A franchisor which wants to give “earnings claims” really needs to have eight or 10 franchisees within the local area that the franchise buyer is looking into. And the franchisor would have to audit the books of all of the other franchisees in the area to give an accurate number. It is quite adversarial for a franchisor to audit the books of all their franchises, it’s like the IRS coming in an auditing your family every year, and to do that just to give as new franchise buyer satisfaction certainly does not make any sense.
And, even if all the other franchisees in the territories that are near where the franchise buyer is considering purchasing are similar, there is no way to guarantee those results will bare resemblance to what a potential future franchisee to earn. After all, he could have a bad location, hire less than adequate employees, or the city in which he locates could have a major factory close causing the local economy to tank. If any of these things happened the franchisee will be upset because he did not earn the money he was promised.
Therefore, the franchisee who has underperformed will want to sue the franchisor, claiming it is somehow their fault instead of his. Whereas, this may or may not be true this type of incessant litigation is not worth risking for many franchisors; therefore, they will most often decline making an “earnings claims statements” to potential franchise buyers. In actuality, this is the most honest thing they could do, but the franchise buyer may feel it is dishonest because they are not answering his most important question prior to the purchase; how much money can I make? Indeed, I hope you will please consider all this.
Lance Winslow is a retired Founder of a Nationwide Franchise Chain, and now runs the [http://www.worldthinktank.net]Online Think Tank. Lance Winslow believes in franchising.
Article Source: http://EzineArticles.com/?expert=Lance_Winslow http://EzineArticles.com/?Franchisor-Challenges-With-Earnings-Claims-and-Lawsuits-Considered&id=3279375
—————————————————–
Get all the information on these opportunities, www.trufoods.com
You must log in to post a comment.