This story originally appeared on The Franchise King
If you’re in the first stages of investigating franchise business ownership, there’s a thing that I want you to understand, and that means you won’t feel ambushed when you begin reading the Franchise Disclosure Document (FDD).
You might have going to your numbers.
I’ve some trying to explain to do
In the event that you happen to be coming to the franchise table from a career in sales, you understand all about quotas. Right from the start of a sales period before end, quotas gnaw away at you, day-after-day. They’re an invisible-yet powerful force that forces you..and all sales professionals, to escape their comfort zones, and…
Because if you don’t sell you don’t eat. And, you’ll oftimes be out of employment.
But, in the event that you do meet your quota, you do get to eat, (your loved ones does too) and you reach keep your task for another sales period. Cool.
Incidentally, I am hoping that you’ve been following along as I reveal THE VERY BEST 40 Franchise Questions To Ask Current Franchisees. We’re on franchise research question #19; “Must you hit the very least sales quota?"
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Do franchise owners have sales quotas?
In the event that you were hoping to eliminate the monkey on your own back referred to as a quota, by becoming who owns a franchise business, well…you’d be wrong.
Did you know some franchise agreements — those 30-page legal documents that are conveniently written in legalese — have sales numbers for you personally, the franchisee, going to?
That’s right; you might have a quota, and in the event that you don’t reach it….
The experts at SBA.Gov put everything in black and white for you personally: “The contract between your two parties usually benefits the franchiser a lot more compared to the franchisee. The franchisee is normally at the mercy of meeting sales quotas and must purchase equipment, supplies and inventory exclusively from the franchiser.”
And, this next part is pleasant: “As a franchisee, the franchiser often gets the to terminate your business if it does not operate based on the agreement, becomes delinquent on royalties, or violates other contract specifications.”
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Don’t panic. Yet.
Because the franchise documents say that you’re necessary to hit certain sales targets, it doesn’t imply that your franchise will be terminated in the event that you don’t. But, it could be.
The truth is this. Franchisors aren’t seeking to terminate franchises. They might much rather keeptheir franchisees fat and happy. (The smart franchisors, anyway) Legal costs could be pretty heavy for the franchisor if indeed they choose to start out termination proceedings. Plus, it’s bad PR.
However, franchisors don’t want under-performing franchisees within their systems. It costs big money to keep a franchise system up and running-franchisors are always buying their concepts…upgrading their technology, thinking up new marketing campaigns…all things that help franchisees earn more income. So, the franchisors could make additional money.
In the end, both parties are in it to win.
Ask current and former franchisees this question about quotas. Inquire further how aggressive the franchisor is approximately enforcing sales quotas. You don’t want any surprises. And, don’t forget to utilize a franchise attorney.
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