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Management Competency
 Ensure whether the existing management (the franchisee)
has adequate capabilities and staff to manage the growth of
the franchise system
 FRANCHISEES are appointed to become the integral part
of the franchise system

2. Competitors’ Analysis
 Competition on both at the franchise level and also at the
consumer level
3. Conflict Management
 Anticipate probable source of conflicts between the franchisor and the
franchisees and devise strategies to resolve them
 Source of Conflicts
1. Inadequate support from the franchisor
2. The franchisees are not behaving the way they are supposed to as per
the rules of the franchise system
3. Revenue sharing
4. Inability to fulfill the commitments made before entering the

4. Economic Impact
 Impact of investments, cash flows and profits of both the franchisor
and the franchisees
5. Financing Requirements
 Whether the kind of investment the franchise system
requires shall be fulfilled by a potential franchisee
 Alternate sources of finance
 Possibility of making institutional arrangements with
finance companies that can provide finance to the
potential franchisees on the recommendations of the
6. Exit Strategies
 An exit clause
 Modality to terminate the agreement
 For the unviability of the franchisee or unsuitability at
a later stage
 In the case of disputes, the legal recourse available to
the franchisee or the franchisor must be articulated in
the franchise agreement
7. Marketing Strategy

 Market segmentation approach

 Targeting strategies
 Positioning approach
 Qualifications of a franchisee
 Franchisee profile
 Franchisee selection criteria
 Franchise relation management approach
 Sales procedures
8. Management Information System
 Managerial approach to accounting and the use of
information technology
 Information generated and maintained systematically
offers the franchisor an upper hand in managing the
franchise better
9. Business Policy

A well-defined policy pertaining to

1. Acquisition of real estate

2. Location planning
3. Territorial rights
4. Supply chain management
5. Advertising
6. Recruitment and selection of staff
7. Sales promotion
8. Revenue sharing
9. Cost sharing
10. Equipment
11. Terms of franchise offering
10. Training and Programme Calendar
 Training programs and manuals
 Contains the details of:
 The content schedule
 Cost of training
 Training staff
 Other procedures pertaining to training and
11. Monitoring Mechanism

Pertaining to:
Site selection and development
Operating standards
Financial management
Sales and marketing
Usage of trademark
12. Support Mechanism
Documented procedures for providing support to the franchisees

 Office support
 Field support
 Ongoing visits
 Contact reports
 Market research support
 Motivation programmes
 Franchise relation programmes
 Communications