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Ensuring you don’t end up living a contractual nightmare

Written by Tony Bowman on Monday, 26 March 2018. Posted in Franchise

Before signing the dotted line, make sure your chosen franchise shows signs of excellence

Ensuring you don’t end up living a contractual nightmare

Even if you opt to join a franchise there is no such thing as guaranteed success when it comes to launching your own business. Fortunately, following a few simple steps can ensure the franchise you choose will help you get off to a good start. If you don't, then the excitement of becoming self-employed could easily be replaced with the disappointment of failure.

A lot of people have learned this the hard way. I was reminded of this a few weeks ago when I was asked for advice by one of the mechanics at an excellent family-owned garage we have used for many years. He wanted help to escape the clutches of a truly terrible franchise he’d joined. The mechanic had hoped to change his career by becoming a franchisee. So when he was promised to be able to build a business that would support himself and his family, he had eagerly signed on the dotted line.

However, after having duly paid for training and received a certificate, he found out that customers were few and far between. To exacerbate the situation further, the monthly franchise fees kept coming. Compounding his frustration was the fact that the franchisor was demanding a huge sum to release him from a five-year commitment to pay ever increasing monthly fees.

Sadly, he ended up buying his way out of the franchise and is much poorer for the experience.

The morale of the story is that budding franchisees should always do their due diligence to avoid falling into the same trap. Ensuring your chosen franchise is reputable, ethical and sustainable is a great foundation to build your burgeoning business on.

The first thing to look for is if your chosen franchise is a member of the bfa. While there are some good franchises that are not members, no members are bad franchises. That being said, there are some very good newcomers to our industry that haven’t become members yet. If the franchisor is not a member then you should also find out how long the franchise has been established for.

Additionally, if the franchisor is not a member you should enquire whether or not their franchise agreement was drafted by a specialist franchise solicitor affiliated to the bfa.

A franchise’s operations manual is a central piece of its model and budding franchisees should always take a long hard look at it before joining a network. Given all businesses evolve, the manual should reflect this and show signs of having been regularly updated with new material.

Another key consideration is whether the franchisor's remuneration from the franchisees is based on sales turnover or on a monthly fee. Even though a number of good franchises charge a monthly fee, the former is the norm.

It's never a bad idea to ask for outside council. If your bank has a franchising division, as most of the main banks do, ask your local manager to check out your shortlisted franchises with their specialist team.

Finally, the last crucial thing to look for is whether or not anyone in the franchisor's management team is a qualified franchise professional. This demonstrates a serious commitment to ethical franchising. If you can tick on all or most of the boxes above and you are prepared to work hard and follow the franchise system, your chances of success are greatly enhanced. 

About the Author

Tony Bowman

Tony Bowman

As well as winning over the masses with his mobile tyre fitting franchise etyres, Bowman has also served as chair of the bfa’s London and South East region. He fills his free time with flying, music, clay target shooting and tackling environmental issues.

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