UNDERSTANDING UNPROFITABLE UNITS
Scott Kern ran a
chain of 420 franchised ice cream shops and understands the problem
of unprofitable franchisees. Allan Hillman has been on both sides of
the problem of unprofitable franchises, representing both franchisors
and franchisees in the difficult situations that arise when units are
unprofitable. Helping a franchisor understand the causes of franchisees’
troubles goes far beyond legal expertise and taps our extensive franchise
business knowledge. We help clients bring the right resources to bear
on the question of why certain franchisees are not profitable.
Sometimes we help
franchisors find out what their dealers are doing wrong:
- Critical analysis
of site selection criteria for retail operations
- Local competition
- Store level
- Theft, waste
and portion control
- Absentee operators
We help franchisors
analyze, discover, understand and fix problems with unit level profitability
caused by dealers.
a franchisor has to look critically at what it may be doing wrong itself:
- Is the initial
investment for fit-up too high?
- Are operational
costs at the store level too high?
- Is the national
advertising program effective?
- Does training
lead to operational excellence?
- Do struggling
franchisees receive strong operational support?
- Does the franchisor
provide effective assistance and good programs for the local marketing?
- Are the company’s
products and services well accepted?
- Are there regional
differences in consumer acceptance of products?
failure at the earliest stages preserves distribution and avoids litigation.
The assistance we provide to clients identifying the causes of poor
unit level profits cannot be overstated. Allow the Franchise Law Source
to help you design programs to analyze and correct profitability problems
at the local store level.
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