As an organisation that was created in 1977 to differentiate good franchises from bad, the BFA knows an awful lot about unscrupulous franchise organisations and sadly, some still exist today. However, with the power of the internet, todays potential franchisees can (and must) do copious amounts of due diligence themselves, before buying a franchise in 2023.
Whilst we would never suggest it should replace independent research, potential franchisees can also take advantage of the list of 300+ franchisors on our website who have had their business thoroughly inspected before being accepted as members of the BFA and who are under constant scrutiny and regular re-evaluation to ensure they continue to meet our exacting standards.
But what do these checks look like, what are we looking for and why is it so important for you, the potential franchisee?
Factors the BFA scrutinises when assessing a franchise
Franchise Agreement – we look at the franchise’s franchise agreement to ensure it complies with our code of ethics. Click here to download a copy of the Association’s Code of Ethics: https://www.thebfa.org/the-bfa-standards/ . We would strongly recommend you get your franchise agreement checked by your own independent franchise specialist solicitor. Occasionally amendments are made to a franchisees’ agreement on the advice of their solicitor. A list of specialist franchise solicitors can be found on our website: https://www.thebfa.org/advisors/
Financials – As you can imagine, this is an area we pay close attention to. We want to make sure their franchise is viable and that franchisees can build ethical, sustainable, profitable businesses. We will want to see that there are funds in place to keep the franchise going, and to see the business model that it is built on. We will also want to see their P&L sheets to make sure everything is running smoothly.
Operations Manual – The ops manual is one of the most important parts of buying a franchise; it is the handbook that is given to you on day one, that tells you how to operate the business. We want to see that it is comprehensive and regularly updated to take into account changes in the law or business practice. It should be a living breathing document, not a dusty tome resigned to the back shelf of the office.
Marketing Materials – We take a close look at all their marketing and advertising materials. Often franchisors will make claims in their prospectuses about the amount of money a franchisee can earn; we want to see evidence of how they arrived at those figures.
Recruitment Strategy – Support is all important when buying a franchise so when we ask a potential new member how many new franchisees they aim to take on in a given period, we also want to know how they are going to support those new franchisees if they are successful. Do they have enough members of staff to support them? If not, what is their strategy?
Satisfaction Survey – existing franchisees
If a franchise applies to join who already has existing franchisees we will do a satisfaction survey with them, to ensure they are all happy with the franchises they have bought and the support they receive from their franchisor. Franchisees are an extremely good reflection of the happiness of a brand.
Why are some brands are not accepted as members into the BFA?
There are two main reasons we reject applications to join the BFA: if we have issues with their franchise agreement, eg our solicitor doesn’t think it is fair and they refuse to amend it, or if they refuse to show us their business model. Transparency is non-negotiable.
How long does it take to join the BFA?
Generally, it is a four-to-six-week period. If you looked at a franchise and rejected it a year ago because it wasn’t a BFA member, and here you are 12 months later and it still isn’t a member, it isn’t because ‘these things take time’. They don’t. It either hasn’t applied or it can’t meet our standards.
Do most franchisors get through the examination period without any additional reviews?
No! Joining the BFA is like having an MOT on your car. We do our initial examination then you’ll be presented with a list of things to be amended/tweaked/improved. Franchisors really shouldn’t be put off by this; we’ve never had a franchisor who has gone straight through so it’s nothing to be ashamed of, it’s just making sure you are completely in line with our code of ethics and all the points above.
Caveat Emptor – Buyer Beware
Despite this long list we would still recommend you do your own rigorous and robust research into any franchise you are thinking of buying. One of the first places to start is to talk to the franchisees; if things are going wrong at head office, the franchisees will be the first to let you know. If necessary, Google their different locations and give them a call. This could be the most important research you do.
The good news is that, according to our last survey in 2018 (another one is due out in January 2024) only 1% of franchises fail because you are following a tried and tested business model, so get the franchise right and you’ll be alright. As ever, we are your friend in franchising so if in doubt, give us a call.
