What to look for when investing in a franchise
As we tentatively head towards a lift in the economic climate and the early signs of increased lending, particularly amongst the SME sector, so general business confidence is on the up. Such indicators are prompting many people to re-evaluate their circumstances and, particularly, their careers and lifestyle and causing them to explore the franchising sector.
Making the decision to become a franchisee, however, is only just the beginning of the journey – with the UK franchise market consisting of well over 900 franchise brands, the path to choosing a franchise appropriate to your individual circumstances can be beset with indecision. Franchising is not a quick-fix solution nor is it a part-time hobby. You need to have the right temperament, enthusiasm and backing to get started, as with any business. Franchising encompasses a whole multitude of business disciplines and markets and consequently should be entered into with eyes wide open.
With these considerations in mind, we look to the national franchise exhibitions and the opportunities for information gathering that it offers those considering investing in a franchise. The show provides people with the chance to explore some of the many different types of franchise available, to meet owners and franchisees and to talk to industry experts as well as attend free seminars and gather reliable information about all the various aspects of franchising.
Some aspects to consider when embarking on the possibility of a franchise are:
- Finances: Do your sums and find out realistically what funding you have available or potentially available. If you will need to raise finance it is worth noting that there are three major banks that the bfa accredits because they understand and specialise in franchising. Ask to speak to a specialist franchise department or advisor.
- Lifestyle hurdles: Ask the question “Do I fit this business model?” For example, if you are considering investing in a restaurant, are you able to work nights and weekends? It sounds logical, but be sure of the chosen field.
- Do your research: Market research is vital, take time to look at the different types of business models available to you, because there are so many out there. Keep an open mind about what industry sector you are interested in rather than simply choosing a business sector that you understand or have experience in. It may be that a completely new area suits you much better.
- Honesty is best: Make sure that you thoroughly investigate any franchise opportunity that you are seriously considering. Look further into the franchise and get as much information as possible. The franchisor should be transparent about success, where in the country it has performed well and also where it hasn’t. Ask to speak to a number of other franchisees not just the one the franchisor recommends, they should be open and honest enough to allow you to speak to any one of their franchisees to ensure you get the information you need to make an informed decision.
- Check the detail: Those franchisors that have been accredited by the bfa have had to go through stringent tests on their franchise, so you know that it operates in an ethical way. However, as with any business contract make sure you read the small print and get legal advice if required. Franchise agreements are generally very large documents and can be very involved.
- Not a quick-win! Although franchises are generally more successful than other business types, it is by no means a license to print money. It takes a considerable amount of hard work and determination, but preparation is key and if you spend the time initially gathering as much information as you can, you will eliminate the possibility of making the wrong investment.
Many of these elements will be covered within the range of seminars and conference programme available at the Birmingham exhibition. Topics include: an introduction to franchising; families in franchising; hands-on franchises; executives in franchising and growing your own business. Those new to the franchise industry will also benefit from the ‘Franchise Starting Point’ where industry experts, consultants, lawyers, bankers and franchisors will all be on hand to offer free one-to-one advice. The Franchisee Panel is where visitors will be able to find out the realities of making the move from being employed to becoming a franchise owner – franchisees from various backgrounds will detail first hand their experience of making the transition.
This robust business model, fuelled by dedicated individuals, encompassing many different skills and backgrounds, opens up countless opportunities for people looking for a new start. Becoming a franchisee is a serious business option and one that requires hard work, lots of enthusiasm, dedication and business acumen. That is not to say that there isn’t a suitable franchise business out there for everyone, but you do need to choose carefully.