To develop a list of reasonable requirements that reflect the franchisor’s control or assistance is imperative to the standardization of the franchise. According to the Federal Trade Commission, “the franchisor will exert or has the authority to exert a significant degree of control over the franchisee’s method of operations or provide significant assistance in the franchisee’s method of operation” (ftc.gov., 2008).There are several opportunities that would be important in maintaining the control over the operational activity of the franchise as well as the profitability. Three major requirements for opening a new franchise would be listed as financial qualification, experience requirements, and achievement of compliance. These must be clearly outlined and addressed on a regular basis.
Firstly, qualifications for the franchise should be
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Diligent background checks and financial credit reports would need to be provided and checked for accuracy. The Board of Trustees would be involved with each application and approval process. Even with this stringent process, understandably this does not always provide protection from misconduct. Ultimately, financial qualifications would be important for a solid financial investment and aid in creating a vested interest.
Secondly, I would increase the requirements that are related to experience and skill in the industry. Poor management is the cause of many failures in the business world (O. Ferrell, Hint, L. Ferrell, 2009). This would eliminate many applicants that may not have been in the business long enough to have a solid foundation for experience in maintaining control and also increasing volume in their prior endeavors. Entrepreneurs and franchisee tend to work extremely hard and will maximize their investment by working harder to achieve more (Hornsby, n.d.