Taking the decision to buy a franchise is a big step. It has the potential to change your life for the better. But, like any career decision, it can go horribly wrong. Here are some top tips to ensure your choice to move into franchising turns out to be the right one.
Do your research
To be successful in franchising, you need to learn about the sector. There are important legal and financial considerations to be aware of. Franchising is different to being self-employed or employed. For some people, it’s a fantastic blend of both, giving you the freedom to run your own business with the support of a franchisor. But it’s not for everyone. You need to be able to follow the franchisor’s tried and tested model and be comfortable with that.
Improve your skillset by learning about the types of franchising opportunities available and how you can evaluate them. Be able to talk confidently about legal areas such as confidentiality, deposits, and franchise agreements so potential franchisors see you are serious about your business. Are you comfortable writing a business plan? Do you know what financial targets you may have to meet? By going into franchising fully informed, you can maximise your chances of success.
Don’t be afraid to ask questions of anyone and everyone to ensure you make the right choice. Talk to existing franchisees as well as the franchise owner. Discuss the opportunity with your friends and family. You will need their support as there will be tough days as well as huge highlights on your franchising journey. Seek professional advice on key decisions, such as whether to set up your business as a Limited Company or a Partnership. Create a circle of contacts you can trust as you launch into this new area.
Understand the franchisee recruitment process
Remember that whilst you might want to buy a particular franchise, you also need to convince the franchisor that you are the right person for them to entrust their franchise to.
Find out what franchisees expect from a potential franchisee. Make your application more attractive by demonstrating the knowledge you have acquired about their business and the franchising sector. Franchisors will be impressed if they see you have done your homework on them and the industry. This demonstrates that you are serious and capable of hard work, some of the crucial attributes franchisors look for.
Remember, franchising is about following an existing business model. You don’t have to be an expert in the field that the franchise operates in, but you do need to be enthusiastic, passionate, committed, resilient, organised and driven. Whilst the franchisor is there for support, it’s up to you to make your business a success in the long term.
Appreciate how to own and operate a business successfully
You may have worked for a business before, but owning and running one is quite different. There is so much to learn, and it all starts with a business plan. This is a living, breathing document that should guide your business. If you want to apply for finance, you’ll need to convince the lender through your business plan that you can repay the funds they agree to lend you. Outline what you are trying to achieve and how you will get there. Highlight potential risks and actions you can take to mitigate those risks. Update your plan regularly to ensure it remains a valuable management tool for your business.
Get comfortable with basic accounting. Businesses generally go under when they run out of money, not because they don’t have a great idea. Do you know your profit and loss from your balance sheet? Can you forecast your cashflow? Now is the time to master your numbers, as being confident with your key financial metrics will be critical to achieving your franchise goals.
Investing time in these critical areas can put your franchise on the path to success. If you want to know more, the British Franchise Association offers a free training course for prospective franchisees. The self-paced online course gives you a comprehensive overview of entering the franchise sector, fully preparing you for all aspects of becoming a franchisee. By completing the models and assessment, you will receive the Prospect Franchisee Certificate, demonstrating your commitment to your future in franchising.