skip to content
blog home Start a Franchise What Future Franchisees and Franchisors Need to Know About the Term “Proven Franchise System”

If you are researching the benefits of franchising, buying a franchise or starting a franchise, chances are that you have come across articles and promotional materials discussing the benefits of a proven franchise system. That is, prospective franchisees are advised that if they become a franchisee of  a particular franchise they will benefit from a proven system. While this vague term is used often and claimed by almost all franchisors, not every franchisor possesses legitimate systems and not every franchise system is proven.

So, what is a proven franchise system? While this question is subject to a broad range of interpretation, the following is some fundamental information about systems and franchise systems that must be considered by prospective franchisees and franchisors:

Systems – are simply the procedures and tasks undertaken by business owners and managers in connection with the day-to-day operations of a business.  Every aspect of a business including, advertising, financial controls, production of goods, employee management, and customer service can all be boiled down to a set of procedures and systems.  Not every business is successful and not every system is effective or beneficial.

Franchise Systems – are the procedures and tasks itemized and detailed by a franchisor (typically disclosed and detailed in the franchisor’s operations manual) in connection with the operation of a franchised business.  A franchisors business systems typically include tasks and procedures focused on (a) Marketing, (b) Customer Service, (c) Employee Training, (d) Production of products and (e) Methods for delivering services.

Proven Franchise Systems – Are the franchise systems that have been previously implemented (presumably by the franchisor and other franchisees) and have been demonstrated to result in successful and profitable operations of the franchised business.

Considerations for Prospective Franchisees:

Effective and legitimate systems are critical for the successful operation of a franchised business. Don’t just assume that a franchisor’s systems are proven or effective. Ask the franchisor’s representatives detailed questions about what makes their systems unique, effective, and profitable and recognize that the proven nature of a start-up franchisor’s systems, in most cases, may be extremely limited.

Considerations for Prospective Franchisors

Successful franchise systems depend on successful franchisees.  The mere act of preparing franchise disclosure documents and registering disclosure documents does not create a franchise. Strong franchises require thought out and tested business systems and procedures that have been tested and proven successful.  During the start-up franchising stage controlled growth (with limited franchise sales) may be necessary to will permit the necessary monitoring and refinement of your business systems.

Related Articles:

By admin November 9, 2015

Franchising Guides

The Ultimate Guide to Franchising Your Business

New to franchising? Do you want to learn more about franchising your business, where to start, the steps, and how to know if you are doing it right?

Learn More

Is Your Business Franchisable and Should You Franchise?

Franchising may be the next big step for your business and represents an opportunity to grow your brand. So, how do you know if franchising is right for you? How do you know if your business is franchisable and, if it is, whether or not you should franchise your business? To answer these questions you must evaluate whether or not your business is franchisable and, if it is, whether or not your individual goals and your business goals align with franchising and establishing a franchise organization responsible for on-boarding, training, and supporting franchisees.

Learn More

Licensing Vs. Franchising

When considering expanding a business both franchising and licensing are possible options. Each option however comes with different rules and regulations. Prior to moving forward with franchising a business or licensing a business it is important to understand the differences and how each may have an affect on you.

Franchise Lawyer Charles N. Internicola wrote “Licensing versus Franchising” for the very purpose of allowing successful business owners to understand the difference between licensing a business and franchising a business.

Learn More

Guide to Selecting a Franchise Lawyer

If you have questions about franchise lawyers, what they do, how they can help, the cost, and how to select the right franchise lawyer for you, then this guide will help.

Franchise lawyers advise and represent individuals and businesses on legal issues that involve franchising a business, preparing an FDD, filing and renewing FDD registrations, buying a franchise, and litigation involving the franchisor and franchisee relationship. The role of a franchise lawyer varies depending on whether he or she represents the franchisor or the franchisee.

Learn More

Item 19 Financial Performance Representations

Check out our guide where we discuss how to plan and properly disclose Financial Performance Representations in your FDD.

Learn More

Franchise Sales Compliance Guide

Are you a franchisor or a part of a franchise sales team? Do you want to learn more about franchise sale compliance and ensure that your sales practices comply with franchise laws and are consistent with best practices? Then this guide is for you.

In this guide you’ll learn the fundamentals of franchise sales compliance including the franchise laws, regulations, and best practices that your team should have in place for every franchise sale.

Learn More
Close Overlay

Let’s Talk

With services to make your growth strategy simple, cost effective, and with a team excited to help you, let’s talk about how we can help grow your business.

Fill out the following form and we’ll contact you as soon as possible. To reach our team directly, give us a call at (800) 976-4904.