Purchasing a franchise is not something you should attempt quickly. Be extra-thorough and carry out plenty of in-depth research before making your decision, explains franchising expert Richard Pakey.
As we slowly progress towards the end of 2020, the world of franchising remains incredibly buoyant despite the on-going doom and gloom which exists in many areas of the UK economy. Some franchisors are recording record levels of enquiries from potential franchisees, so it’s not all bad news within the business community.
In my October column, I will try to advise those wishing to purchase a franchise, on how best to accomplish this often stressful process. This is my step-by-step guide which, while not definitive, should help you to make that next step into franchising. I hope you find this a useful resource.
Which type of franchise should I buy?
With more than 1,000 franchises in the UK market (as you will soon discover by regularly reading content on Elite Franchise), making the right choice requires a studious approach. Having helped many budding franchisees over the years, my first question is usually: What sectors are you genuinely interested in? Generally, people perform better when they have an interest in the brand or product they are trying to sell. For example: There is no point purchasing a pet care franchise if you do not like cats and dogs!
What skills do I have?
Identify your strengths and weaknesses because you really should be looking at a franchise that allows you to use your talents and knowledge. You can still tap into your entrepreneurial spirit to improve on your weaknesses but not to the detriment of your business. For example: You might have a real passion for numbers and data, but struggle to find the energy to carry out social networking. Therefore, be aware of your comfort levels and their boundaries.
How much can I afford to invest?
This is an area that is far too often overlooked. Don’t get carried away with the subject matter, only to discover much later that it’s a ‘bricks and mortar’ franchise, with a heavy reliance on capital for funding assets, such as stock, fixtures and fittings, as well as employing staff. Be realistic with the funds you have access to, so that you have enough money left over by the time you are ready to start trading. You will need to not only consider the cost of buying a franchise, but also the working capital during ‘year one.’ These include your own costs for covering your everyday personal expenses. I’ve seen so many promising businesses that are profitable but which fail because they run out of cash.
There are many franchise options available
You will be amazed at how much choice there is. Yet it’s hard to know whether this is a good thing or not. But because there are so many different options available, it’s important to know when to stop looking. Limit your research to those franchise sectors you genuinely have an interest in, and work out which ones you can afford to purchase. This includes knowing its day-to-day operating costs. If you fail to do this, you will merely scratch the surface and you won’t progress quickly. Make a shortlist of maybe 10 franchises at most, and then carry out in-depth research on all 10. The data you compile must be as comprehensive and as far-reaching as possible.
Where do I obtain information about a franchise I am keen on?
There are a number of good starting points for this, including the website Elite Franchise. Content sources, such as EF, provide you with an excellent platform for contacting multiple franchisors. In many cases it’s as simple as clicking on a link at the end of an article, which may transport you to a form which needs to be filled out – and then digitally returned to the franchisor. In return you will receive an information pack. You should find franchisors helpful and always ready to answer any questions you may have. Try to engage with them in a two-way conversation, so they know you are interested in selling their product and representing their brand.
How do I proceed with actually investing in a franchise?
Here is a Top Tip that will help you. It’s vital you work your way diligently through the entire application process from A to Z. You might feel you are ready to buy from the outset. However, a franchisor needs to be reassured that you can follow their tried and trusted system. Unless you demonstrate this to the franchisor, how do you expect them to trust you with their brand and its reputation? And it’s just as important for you to understand every step of the process. You don’t want to spend hard earned money buying a franchise that doesn’t turn out to be what you thought it was. Ask questions, attend an open day and speak with other franchisees.
Is there help when trying to find a franchise?
The great news is that there is plenty of help out there. There are many franchise consultants available to assist you, and because most of these are paid by the franchisors, this service is usually free of charge. It’s important to utilise a consultant while researching about the different types of franchises. Some consultants represent several brands and therefore know the processes inside out. Use these professionals to ask difficult questions. Sometimes it is easier doing this with a third party advisor, rather than asking an awkward question to the franchisor. If, after this process, you do not wish to proceed, move on to your second choice.
