Business guru Nigel Toplis outlines his four-point plan for anyone thinking about becoming a franchisee.
Getting married, having kids and moving house are considered to be the three most important actions we undertake in our lives. They are often the most stressful too. Well, let me assure you, purchasing a franchise is right up there with the other three. All four processes require very careful consideration and due examination, with franchising best evaluated through a system of due diligence.
I have four rules for anyone considering buying a franchise and the first of these is ‘don’t rush’. And don’t allow the franchisor to rush you either. There is simply no need to rush and, frankly, it is better for all concerned that you take your time.
Be as thorough as you can and then you’ll know that you’ve made the correct decision. Once you have thought it through in detail, you’ll feel confident and excited about the future. The franchisor should also feel satisfied that they have a franchisee who is totally committed to the business.
I’ve often remarked that good franchising is a ‘marriage’ and you wouldn’t want to rush into marriage without due consideration, would you? There is a thorough six-stage process I recommend to everyone seeking to purchase a franchise. It is far too detailed for this article alone, but once you believe you have selected the right business opportunity, you then need to take a step back and ask a series of questions.
- Does the franchisor have a solid trading history?
- Are they financially sound?
- Do they have a history of success?
- Is there a genuine head office support structure?
- What do they actually provide by way of support?
- If the franchisor supplies the product, what are the terms and conditions?
- Are projected cash flows realistic? And can the franchisor prove this?
- Does the company have a finance facility with the banks?
- How tough is the interview process?
- Can you see yourself as part of this franchise?
These questions will allow you to conclude if the franchisor is stable; whether they provide a solid support structure; if it enjoys a good strong reputation; and if it’s run by a franchisor who is not prepared just to take anyone as a business partner.
If you conclude that this franchise is indeed right for you, then you still require some additional professional advice. Seek the knowledge of a British Franchise Association accredited lawyer who will assist you with regards to franchise agreements. Speak to a reputable accountant – and you may need to do your homework here before approaching one. The accountant will help you devise a business plan. Also talk to a business advisor employed by a bank, to find out information about loans.
My final rule is straight forward – make a decision. So, before signing-up, take your time, ask the right questions, and get some professional advice. Then make your decision.
