How to choose a franchise
Franchising is a means of starting and running your own business with a very high success rate, providing you choose a good franchise in the first place.
There are never any guarantees in business, but you can increase your confidence and chances of success by following these key steps when considering franchise opportunities.
bfa membership. Whilst it is not a guarantee of business success, it does ensure that the franchisor has been independently measured using established membership criteria against a code of ethical franchising. Only those that pass the strict criteria can join – many are not able to reach the standards!
Your finances. Understand right at the beginning what you can afford to invest and what borrowings you are prepared to take. Also pay attention to the returns that the franchise will generate for you. Do this before you fall in love with something that you cannot afford or that cannot support you or your family. There are only a small number of major banks that the bfa accredits as specialists in understanding franchising and providing specific teams to work with franchise business loans – it is best to consult these banks rather than your usual bank manager.
You. What are you good at doing? What do you want to do and what will your family life and personal circumstances prevent you from doing? If you cannot bear the public then consumer facing businesses may not suit. You don’t have to stay in the industry that you have worked in for your whole life but you should go into something where your experience and skills will benefit you.
Research the market. Speak to trade associations for the operational view of the type of businesses you are interested in, for example if you are interested in estate agency, you might speak to the National Association of Estate Agents. Use the internet to research the particular business that you will be involved in. Those entering franchising are sometimes blinded by owning their own business and neglect to fully to fully understand what that business actually does and the market in which it operates.
Research the franchise opportunity. Speak to current franchisees, of your own choosing. Whilst it may be difficult to be given free reign, due to franchisees having other priorities, don’t just settle for the ones you are given. Look for franchisees with a background like yours or ones at differing stages of development in different areas. Also research the franchisor. What is his/her background? How has the business grown? Have they lost any franchisees? Evaluate the support, the value in the costs and the nature of the agreement - all the while the franchisor will be assessing you to decide whether you match what they want.
Professional advice. There are a host of professional advisors accredited by the bfa that specialise in franchising, including consultants, accountants, solicitors, banks, franchisee recruitment consultants and even media. They are invaluable in making sure that you are taking the right steps and don’t miss any vital information. This is particularly important when reviewing the franchise agreement.
Be sure. Take your time in this process not somebody else’s. Make sure that the shortlisted companies have been compared against a standard benchmark or measure and that you have been thorough in your research. If you have any doubt in your mind, then you haven’t done enough research. Your decision could result in a 5 or 10 year commitment so you will have plenty of time to reflect on a mistake – try not to make one!