Finding Good Vendors: What to look for when building vendor relationships

Last time we discussed the fundamental role of vendors in running a franchise business. They're essential partners to your success. You will need all kinds of supplies of products and services to keep the doors open, customers coming and going, and cash registers ringing. Finding the right vendors is critical.

Depending on how your franchisor handles vendor relationships, you may be able to choose some (or all) of your own partners as you open and grow your franchise business. These are critical relationships - usually under contract - and you want to make wise choices. You should make finding good vendors and developing relationships with them a priority as your business goes forward.

Here is a list of 6 tips that will help you make the right vendor choices:

  1. Do your homework. Research potential vendors for all of your business needs. If they are local businesses, make appointments to visit with them in person and take a look at their facilities/operations.
  2. Check references. Talk to other franchisees and business owners who work with the vendors you are considering. Does the vendor have a reputation for delivering what it promises?
  3. Discussion/Negotiation. After you've narrowed your vendor search, it's time to set up meetings with a company representative. Discuss the details - credit terms, return policies, pricing, billing, delivery, etc…Leave no stone unturned. You want to be clear upfront and well informed.
  4. Changes. Discuss how the vendor handles any changes in products, services, pricing, policies, or the manner in which products and services are delivered. You're looking for open and ongoing communication.
  5. Get the ball rolling. If you like what you see and you're ready to proceed, provide the vendor with your financial report and a credit application right off the bat. This will be meaningful to the vendor and help speed up the process of getting the relationship to work.
  6. Continued support. Most vendors offer monthly reports that indicate how things are going. You want regular communication and warnings of changes in the pipeline. 

Finally, complete all necessary paperwork for the new relationship (have your attorney look it over if so inclined), demand that products and services be delivered as scheduled, and pay your bills on time. If you do this, it could just be the start of a beautiful relationship.

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24.1: Vendors as Business Partners
 
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Issue II, 2016

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