Malaysia Franchise Business Research & Feasibility Study – Scope of Work
Introduction & Objectives
At MalaysiaBizAdvisory, our role in this assignment is to conduct Malaysia Franchise Business Due Diligence & Feasibility Study to determine whether the franchise is a good fit for you, and vice versa. Our goal at the end is to make a return on your investment by helping you understand what you’re signing, and more importantly, whether you’re signing with the right franchisor.
We will provide you with the necessary information using our tool to guide you through some of the key issues you need to evaluate, list of questions that we will ask the franchisor when evaluating the franchise’s financials, training programs, support, operational issues, etc., but in the end, the final decision will be between the franchisor and you.
Project activities and deliverables
- Preliminary information
- Contact the franchise company and request basic franchise information. This might be on a website or in brochures, videos or other materials they may send after the 1st visit with one of their development staffs.
- Review the preliminary information to determine if, based on this further information, the company still appears to meet your criteria and is worth spending more time on.
- Facts finding on a short-listed franchise.
- Get a copy of Franchisor Disclosure Document (FDD) from Franchisor. ( if available)
- Study the franchise’s litigation and performance track records and evaluate the franchise’s product or service to ensure they match your criteria and selection of interests.
- Is the Franchisor stable and profitable?
- Is the Franchisor a “centralized” model, where the franchisor controls more of the daily operation, such as incoming phone calls and billing (for a fee), or a “decentralized” model where the franchisee has more control and fewer costs?
- Does the Franchisor provide reasonable marketing assistance to help you build your business?
- Does the Franchisor provide reasonable technical support to you and your technicians?
- Are the Franchisors ongoing fees reasonable for the level of support received?
- How does the Franchisor handle shared advertising funds – do franchisees get to participate in the decision-making process, and are the funds distributed equitably?
- Does the Franchisor restrict you to buying goods or services only from certain vendors? Does the Franchisor choose vendors based on their quality of service or on their commissions to the Franchisor?
- Is the Franchisee restricted in the areas they can operate? Is there a clear expansion path for franchisees to grow beyond a single location?
- Does the Franchisor require a specific vehicle, type of retail location, or uniform?
- Does the Franchisor have any pending or past lawsuits, which may indicate a problem in their system? Have they settled out of court to prevent those lawsuits from showing in their disclosure documents?
- How strict is the Franchisor’s agreement? Are you locked into a certain franchise term, or can you leave early if your situation changes? Are there penalties or non-compete clauses if you leave the system?
- The obligations of either party to the other during the term of the agreement and thereafter
- Find out past 3 years Financial statements of a franchise company.
- Find out how well the initial training programmes support & prepare the franchisees in opening and running their business e.g. is there assistance in site selection, lease negotiation, construction & design, securing financing, permits or any other factors unique in getting the business up & operating?
- On-going support?
- Purchasing Power – Does the Franchisor use collective a buying power of the total system to get discounts on supplies and inventory beyond what an independent operator could achieve? This factor is one of the biggest advantages of joining a well-run franchise system and should offset much of the upfront fees associated with being a franchisee.
- Franchisee Calls and Visits to get a sense of their management style. Ask them what the day to day life of a franchisee at their business is like, or what types of traits or skills sets they have found to most likely lead to success, what types of returns they have made on their investments, and how much they could resell for etc.
- Visit the Franchisor -Assuming everything else checks out, second-to-last step is usually a visit to franchisor headquarters. This is a great time to get any final questions answered and to meet the people who will be helping you get your business up and running. Though this may seem like a formality, it’s a vital check-and-balance to make sure you are completely comfortable and confident in the company you are about to enter business with. Furthermore, keep in mind that they will be carefully evaluating you as a potential franchisee at the same time, so this final judgement is a two-way street.
- Make a Decision
The research & feasibility process will be divided into 5 phases and takes a good two to three months (or earlier depending on the franchisor cooperation in sharing information) of focused energy to come to some point of clarity.
With this service available to you, your investment risk will be minimized! Call us at +603-2181 2882 today how it can work for you before you start your Franchise in Malaysia!
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