How to select a franchise supplier.

Author:Zwisler, Carl E., III
Position:SUPPLIER SOURCE BOOK - International Franchise Association
 
FREE EXCERPT

You are reading a Directory of members of the IFA's Supplier Forum presumably because you are either curious about the membership, or because you need a product or service which may be offered by someone identified in the directory. At this time Supplier Forum members are represented in 32 business categories. These Supplier Forum members are a self-selected few among the thousands of companies that offer services and products to franchising companies. The companies listed in this directory have set themselves apart from the multitude of suppliers in two significant ways. By joining the Supplier Forum they have, through their dues contribution and, often, their active involvement in the organization's activities, demonstrated their commitment to the International Franchise Association (IFA), its members, their principles, mission and goals.

They have also made an effort to develop services and products that are specially suited for franchisors and franchisees. They have generally invested time and money to better understand and serve the needs and problems of franchising systems. As a result of their interest and experience, you, as a franchise company executive should have every reason to expect that these qualifications will make them better able to provide the programs, services, products, creativity and insights that can make a franchising organization more efficient and more profitable.

WHAT ARE "FRANCHISE SUPPLIERS"?

Franchise suppliers fall into two principal categories:

  1. Those providing specialized professional services to franchisors as franchisors, e.g., franchise marketing, or packaging consultants, franchise lawyers, accounting firms and financial institutions which have developed services and products for special use and application to franchising companies, franchise executive recruiting organizations, franchise brokers, franchise publications, etc.; and

  2. Those providing products or services that may be specifically modified or formulated for use through a franchise system, e.g., suppliers of uniforms, Internet services, computer systems, convention services, paper goods, inventory and supplies.

Most of the Supplier Forum members identified in this directory fall into the first category. Because this category of service and product is the type with which executives new to franchising are least likely to be familiar, and about which little has been written, more attention is given to dealing with them in the following pages.

WHAT MAKES FRANCHISE SUPPLIERS UNIQUE?

The very fact that they specialize in providing services and products to a unique form of business arrangement separates the franchise supplier from others. Supplier selection decisions made by franchisor executives normally have repercussions that are far greater than similar decisions made by executives in non-franchising companies of the same size. That is because the selection of an approved product, an insurance program, advertising, or financial institution can significantly affect the profitability and opportunity of numerous businesses operated by franchisees, as well as the economic stability of their employees, suppliers and creditors, in addition to the business of the franchisor.

A decision made about the product one franchisee carries will affect requests to carry the product made by every other franchisee. The new insurance or advertising program, new machine or product offering will generate costs and expected returns for all franchisees and the franchisor. Should the wrong decision be made, the blame will undoubtedly be placed on the franchisor company executive who struck the agreement. If an inadequate franchise agreement, business or financial plan is used, extensive damage may occur before the problem is fully appreciated. If the wrong franchise sales staff or broker is selected, the franchisor may either confront inadequate franchise sales, sales to unsuitable franchisees, or franchisees suing the franchisor for violations of franchise laws. A bad selection of a product supplier can result in poor or late deliveries, poor products, loss of customers, etc. By its nature franchising multiplies the opportunities for benefit and failure. That increases the incentive to exercise care in selecting suppliers.

If you are an executive new to franchising or an entrepreneur launching a franchising program, initial choices are extremely critical. The wisdom of the franchising advice you receive and follow may only become apparent one or two years after you have acted on it. Many new franchising programs have died following a major financial investment, principally because the executive received bad advice, or because the franchisor executives failed to seek or follow good advice. If you are a franchisee or prospective franchisee seeking for a product of service, you know the suppliers you select are often critical to your success as a franchisee. By virtue of being a franchisee you already have shown an understanding of the benefits of associating with people with the experience and vision you believe will enhance your own chances for success. That wisdom should guide you in selecting franchise suppliers who have demonstrated their competence with your franchising colleagues.

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