Developing a franchise agreement checklist should be part of your homework before you start accepting applications from people who want to own a franchise.

A solid franchise agreement checklist is one of those great lists that can really save you from a lot of heartache along with legal and financial problems.  Some people are list keepers and others are not.  But a franchise agreement checklist is much more important than that “honey do” list that hangs on the refrigerator at home.  It is a way for you to “check out” applicants for franchising before both parties sign that franchise agreement and you are business partners through thick and thin.

At the top of the list of things to have on your franchise agreement checklist is financial viability. Viability is a 50 cent word for finding out if this franchise applicant has a leg to stand on financially.  Starting a franchise is no place for someone who is in a rebuilding year financially. Those who make it to the finish line and invest in building one of your franchises must have a credit rating to die for and plenty of financial resources.  That doesn’t mean he or has to have hundreds of thousands laying around in the bank. But it does mean that to make the cut on your franchise agreement checklist, there must be an ability to generate income to afford the franchise fees and the start up costs of getting that new franchise on its feet and running like a top.

Moving down your franchise agreement checklist and you should have several pages of questions meant to check out that the applicant for one of your coveted franchises knows the nuts and bolts of how to run a business.  Clearly you do not want someone to buy a franchise who never taken a business from a start up to a booming enterprise. Buying a franchise is for those who are already a success as a way to expand their ways of making even more money.  So check out how well their current business or businesses are holding up as part of your franchiseagreement checklist and the ones that make the cut will be the good ones.

Grading the Franchise applicant’s homework.

It is not entirely accurate to say that franchising a business is not for rookies because everybody has to start somewhere. But it is accurate to put on your franchise agreement checklist that before the ink is dry on that binding and legal franchise agreement, your franchise applicant must know the ropes of franchising.

If the business person who wants a piece of your success is already running a franchise or two, the success of those outlets is a resume in itself. Just as you check out the business savvy of the individual in previous sections of the franchise agreement checklist, check out how well they have done running a franchise before.

If this is the first franchise purchase for a hot prospect, they should be ready to gain an encyclopedia of information about franchising from the various franchise documents such as the franchise disclosure document and the franchise operating manual.  Don’t be shy about checking out the applicant to make sure that their level of knowledge will make them able to hit the ground running when they buy a franchise from your company and turn that franchise into a money making machine. If they can do that, you want them on your team and their score when you finish the franchise agreement checklist will be very high indeed.