2020 has been a hugely challenging year, with many people spending time on furlough or finding themselves facing redundancy. But for some it provided a spur to make a change, and starting a business has been a way to take back a measure of control.
According to the Office for National Statistics, the number of new companies being created in the UK compared with last year has soared in the second half of 2020,.
Have you been thinking about running your own business but are not sure where to start? Buying a franchise can bring lots of benefits, including a much higher success rate than that for a standalone start-up. But how do you go about finding the right one for you?
There are some key stages along the way, to ensure that you buy the right franchise to suit your own skills and ambitions.
The first step should be to explore all your options.
Give yourself time to work out what you want to do. Franchising is a £17.1bn sector in the UK with over 900 franchised businesses to choose from, across a wide range of industry sectors. Consider the type of business and sector you are drawn to. Do you prefer to stick to a sector that you already know well or is this your chance to take a new direction? Be honest with yourself about your strengths and weaknesses.
You will need to be realistic about the investment level you can afford, how much do you have available to put in to a new business?
Most importantly of all, you need to find something that you will love, as running your own business, even with a franchise, involves a great deal of hard work and commitment.
Then, start your research.
There are a number of places where you can find out more about franchising. The British Franchise Association’s (bfa) website is a great place to start. It has a full list of their members and affiliated advisors who have demonstrated their credentials to get through the bfa accreditation process. The bfa also offer free online training for prospective franchisees, as well as a regular seminar series to help expand knowledge of franchising.
Post pandemic restrictions, franchise exhibitions will once again be a very useful way to start to identify the type of businesses looking for prospective franchisees. There are also magazines and websites with a wide range of information available, with the Elite Franchise Top 100 heading the list. Once you can narrow things down to an industry sector and shortlist some franchises within that sector, you can start to compare the various franchises available. Then it is time to move to the next stage and drill down into the real detail of the franchise you are considering.
Do your due diligence
This is an important stage which should not be rushed. At this stage, you should be able to meet your prospective franchisor and ask them the questions which will help you understand how the business operates and what sort of support is provided. Remember that the franchisor will also be vetting you, making sure that you will be the right fit for their network. The banks who specialise in franchising often have free guides available to help you ask the right questions.
You will need to research your chosen territory; do you understand who your competition will be, where are your opportunities for growth? By now you should have received a copy of the legal contract and you should ensure that you get a report on it from an experienced franchise lawyer (again, the bfa website has a list of all their accredited lawyers and other advisers). Although it is unlikely you will be able to get the contract amended as all franchisees should be on the same terms, you need to know and understand exactly what obligations you will be taking on before you sign.
Start to plan
As you carry out your research, you should also start your business plan. Initially, you will need it to obtain bank funding but it should also provide you with objectives and key milestones to achieve as your business grows. Your franchisor may well give some help in preparing the plan and be able to provide information about typical costs and income potential but you should understand and ‘own’ the plan.
Make sure you are clear about ongoing costs and take particular care to understand how the cash flow of the business works, as you need to ensure you have enough capital behind you at the outset.
Launch!
Your franchisor should provide initial training and support to enable you to get your franchise up and running effectively. Many franchisors provide additional support in the early stages to help with the launch of your new business, including a marketing and publicity plan to ensure that sales begin to build as soon as possible.
One of the best tips for a new franchisee is to make sure you follow the system and operating plan your franchisor has provided and ask for help if you are struggling.
Buying a franchise is a major decision and needs careful consideration. However, franchising offers great benefits for a new business owner, with a ‘tried and tested’ format to follow, initial and ongoing training, as well as the advantages of being part of a network of franchisees.
