When considering a franchise there are many things to take into account to ensure that it can go the distance
It’s impossible to predict the future and success is not guaranteed for any business – be it independent or franchised. However, we all know – and continuous research has confirmed – that the risks involved in operating a franchise are greatly reduced and consequently, while there are no guarantees, the chances of success are far greater in franchising compared to running an independent business. And there are ways to enhance the chances of your chosen franchise being successful.
Some of these considerations are simply a matter of common sense. For example, membership of the bfa indicates that the business has been subject to and passed independent scrutiny. Additionally, I would also be more confident of companies that have a proven track record and have trading histories of a number of years.
But it’s not solely about common sense: you also need to look closely at the franchisor and the level and quality of the support they provide. If I’m looking to buy into a franchise then certainly I would be looking for more than occasional advice over the phone and support from a distance. I would want real people understanding my business and providing me with proactive cover in the key areas of marketing, sales, business planning, procurement, training and finance.
The best franchises are those that foster a marriage between the franchisor and franchisee and as such I want the franchisor to be a positive participant in helping grow the business. For this reason, the franchisor should make the bulk of their money from a royalty based on business performance and not through a huge initial fee. This encourages the franchisor to work hard with the franchisee to help develop their business and over time create new income streams for the franchisees.
The franchisor is therefore a key point of reference when evaluating how future proof a business is and their support, financial standing, longevity and stability should all be closely examined in direct consultation with them. You should also seek advice from business professionals such as the banks, accountants and the bfa to get a feeling for the reputation of the franchisor. All of the above of course acts as a sieve, lessening the risk with each shake.
But as the final and maybe most important point of reference, I would always speak personally to two or three existing franchisees and get their input on the business itself, the support of the franchisor and the robustness of the proposition. As the old saying goes the only guarantee is life in death and taxes but with a little forethought you can at least further reduce the risks involved in owning your own business.