If you want to be absolutely certain about your decision to enter the world of franchising, there are some basic errors to avoid
For most people, buying a franchise is a positive life-changing experience. The Smith & Henderson British Franchise Satisfaction Survey 2016 states that 90% of franchisees say they are happy with their franchise. Low commercial failure rates of just 1% contrast strongly with the 40% of startups that fail after five years, as reported in research conducted by Ormsby Street, the SME-research firm. It all sounds too good to be true.
And, for some, it will be: sadly, buying a franchise will not create a ‘happily ever after’ for everyone. Fortunately, potential franchisees can limit their risk of failure by avoiding these common mistakes.
Get the finance right
For me, it all starts with money. Some franchisees make the mistake of failing to ensure that they have adequate finance in place to enable them to run their business and meet the obligations of the franchise. There are numerous franchise finance schemes in place, from the major franchising banks such as HSBC, Lloyds and NatWest to specialist companies such as Franchise Finance. In the first place, potential franchisees should consider taking out a loan to ensure they have enough finance to run their business and guarantee their future success.
Read and understand the franchise agreement
It still shocks me when I ask if a potential franchisee has any questions about the franchise agreement and they state that they don’t. It's important to ask questions: as far as I am concerned the more you have the better, because asking questions will enable you to have a clear understanding of your legal obligations. Consequently, the better your understanding of the franchise agreement, the more informed your decision to go ahead will be.
Get family and friends on board
Starting a new business will be time-consuming and, frankly, for the first year should be all-consuming, as the more you put into your business the greater your success will be. Family members need to understand how this could impact on family life. I had one potential franchise call me the morning of the signing meeting; he told me that his wife had said she would divorce him if he went ahead. Clearly there had not been enough discussion during the early stages of research.
Understand the day-to-day
It is all very exciting starting your own business. However, as with all jobs, there will be areas of monotony and repetition, so ensure you understand exactly what the day-to-day operations will be. Additionally don’t just focus on the elements of the work you like and are excited about; it is important to consider the less attractive elements of running your own business.
Avoid these common mistakes and, as a result, you’ll move forward with and have confidence in your franchise purchasing decisions, safe in the knowledge that buying a franchise is a great way to start your own business.