Finding the right franchise can be a tricky business. After nearly 30 years in franchising, I believe I’ve discovered the best methodology for selecting the ideal franchise. And it all comes down to assessing the suitability of the franchisor.
Do they have a proven business history? Are there documented systems, processes and protocols in place, and will they happily explain these to you in advance? Does the franchisor provide effective training? Do they have a reputation for robust ongoing support? Is the franchisor a member of the British Franchise Association (BFA)? If they are, this is a strong indication of their business acumen, integrity and historical competence.
Check out the market and competition
The second thing you need to do is assess the market you’re thinking of getting into. You’ll need to be certain it’s a strong and growing market. There needs to be reliable evidence that demand for the product or service can be sustained and that there’s room for growth.
Make sure you assess the competition. I strongly believe that competition in the market, endorses the size and strength of that marketplace. But you need to identify the competition and assess what their strengths are. You will also need to understand where your position in the marketplace is and how you intend to compete.
Speak to franchisees
To ensure the franchise is the right fit for you, you should not only have questions for the franchisor but also seek out opinions and relevant information from franchisees. Ask if they are making money? How many hours do they work? Ask if they get good support from the franchisor and, most importantly, would they buy into the same franchise again? If the franchisor refuses access to their business partners, then look upon this as being a red flag and walk away.
Talk to the pros
If you’ve followed these few simple steps, then you’ve probably reduced your selection to two or three franchisors. Therefore, it’s now time to seek professional advice from a franchise lawyer who will carefully scrutinise the agreement. You may also need to contact a bank to talk about finance, as well as an accountant who will assist you to create a solid business plan.
The Franchise Agreement needs to be fair but will inevitably be written in favour of the franchisor. Why? Well, the franchisor needs to protect the brand, as well as all the other franchisees within the network. Sourcing finance and developing a business plan are especially important once you have set your heart on a franchise.
You will need to figure out how to pay for your franchise and there are numerous ways to beef up your war chest. Try to avoid unnecessarily ransacking your savings or selling your ISAs. And it’s best not to seek out financial help from your family and friends either. You’d be amazed where budding franchisees find the initial investment.
Remember that a franchise is an investment, not a job, so you must determine exactly how much money you’ll need to invest and how much you’ve got. There is no point taking on a business that will only generate half of what you need.
Finding a good, experienced accountant to create a comprehensive business plan is critical. Do not over-extend yourself. Ensure you can make all repayments through the business – and not via your own personal account.
Making The decision
Just because the franchise appears to be a wonderful opportunity, you will still need to make certain it’s the perfect fit for you. Be honest with yourself. Do your strengths and weaknesses match the criteria? Can you see yourself enjoying the business? Can you afford the business and is it a good investment? Do you think you can take the pressure? Finally, do you have confidence in your franchisor? If you answer ‘yes’ to these, then you just might be ready to take a huge step forward in your business life.