Thursday, August 2, 2012

Question To Ask Before Buying A Franchisee


Compiled from Barringer & Ireland (2012) Entrepreneurship, Pearson, pp.531; Scarborough (2011) Essentials of entrepreneur and Small Business management, 6th ed, Pearson, pp.205-206; Mariotti & Glackin (2012) Entreprenuership, Pearson, pp.21

Current Franchisee
Q: What is the background of the company and its performance record?
A: SMM is an education firm of franchise modal. We have been run for 10 years and the fame or the company widely expanding all over Malaysia continuously. Today, we have around 20,000 student and 500 centre in Malaysia and Singapore.
Q: What is the company’s current financial status?
A: Our company financial status is stable. We spend millions for our yearly MRC Carnival, but it doesn’t affect our financial increasing.
Q: What are the names, address, and phone numbers of existing franchisees in my trade area?
A: Our contact is in one location only, which is our HQ in Danau Kota, Kuala Lumpur. You can contact Mr. Tan with our toll-free careline 1300-88-MRC (672)
Q: Describe how you train and mentor your franchisees.
A: We will hold in-house training by time to time by our experienced educator, sharing session, recognition to our prominent Business Associate.
Q: If at some point I decided to exit the franchise relationship, how does the exit process.
A: Well, if it is really do,  you have to sign agreement with us and hands up the centre. We will it relocate with our hired staff. We will buy your assets in 2nd handed price.
Q: In what ways do you work with a franchisee who is struggling?
A: Provide more support, helping on advertising and recruitment.  


Following is the Q&A session with a franchisor of MRC Centre. Name and centre name was covered due to disclaimer.
Current Franchisee
Q: How much does your franchise gross per year? How much does it net? Are the procedures followed make royalty payments to the franchisee burdensome?
A: The franchise gross around RM30,000 per year, and netted around RM13,000. There’s no royalties fees needed.
Q: Are the financial projections of revenues, expenses, and profits that the franchisor provided me accurate in your judgment?
A: Yes, I submitted my location to them, and it’s found convenient to the parents will need to deliver their kids to the centre. And the business modal make me burden free – I didn’t need to pay royalties fee year by year.
Q: Does the franchisor give you enough assistance in operating your business?
A: Before the centre started, we have to attend in-depth training to know the market running on, and some education business knowledge.
Q: How many hours, on average, do you work a week?
A: We work 6 days a week, average 8 hours
Q: How often do you get vacation?
A:  Once per year or even less than that.
Q: Have you been caught off-guard by any unexpected cost or expectations?
A: Yes, This is because we brought a large number of furniture, and also some mistake on counting when we buy books from HQ.
Q: Does your franchisor provide ongoing training and support to you?
A: Yes, We have to attend training by time to time, in order to know about the new policy, new product, business management training and so on.
Q: If you had to do it all over again, would you purchase a franchise in this system? Why or not why?
A: I will purchase this again just because the business modal really work to me, and it’s really benefit to me, my employee, parents and students. 

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