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 rigorous process can join – many are not able to reach the standards we set and uphold.
Your finances. Levels of investment range greatly from smaller amounts, that you may already have available, to larger amounts that you may need a bank loan for. Assess and understand, from the beginning of your process, what you can afford to invest and how much you are prepared to borrow – and remember to consider working capital requirements while your business is establishing itself and may not be turning a profit. A good starting point can be to evalutate your net worth.
Pay close attention to the returns that the franchise will generate for you (ensure those figures are based on verified, historical trading figures of existing outlets), making sure the business can support your lifestyle. Do this before you fall in love with something that you cannot afford or that cannot support you or your family.
There are 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 teams 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 need to be happy with the commitments needed for your new business in making it a success.
Franchising enables you to develop your existing skill set, or become your own boss doing something you are passionate about but inexperienced in, with full support and training, so think about what you are good at and can take on wholeheartedly. You also need to consider the support and understanding of those around you, friends and family, which some franchisors like to gauge as part of their recruitment process.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. That means a lot of due diligence; the training, support, daily operations, ongoing fees, the people involved; there’s a lot to take in. 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 their 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 – you MUST get it checked by a franchise solicitor BEFORE signing it. Know what you are committing to.
Be sure. Take your time in this process, not somebody else’s. Make sure you assess and re-assess everything as part of your research before you fall in love with a concept and a dream – you’re parting with your hard-earned money and making a commitment for several years (usually five at a time, sometimes longer), so it’s essential to be certain rather than making an expensive mistake. A good franchisor won’t pressure you into a decision, they understand the level of undertaking required and want serious people to join their network.
If you have any doubt in your mind, then you haven’t done enough research. Your decision to invest is a long-term commitment so you will have plenty of time to reflect on a mistake – try not to make one!
This article is Published by the British Franchise Association.
Categorised in: Guidance and Advice
This post was written by Home Care Preferred