There are a number of reasons why people become business owners within the franchising community. And in the majority of cases, the main reason why franchising appears so appealing, is that it allows an individual to have greater control of their own future.
That said, it is certainly not recommended to try and purchase a franchise off the peg, and nor would any respectable franchisor agree for that to happen. I firmly believe that, in many ways, franchise agreements are awarded to new business owners by franchisors.
There is a process to follow before an agreement can be signed. It is not just about having enough funds to buy a franchise. You can’t simply go online and acquire one via Amazon or eBay. The purchaser needs to convince the ‘boss’ that they have what it takes to operate the franchisor’s business.
Similar to most things in life, you will only get out what you put in. Not all individuals are motivated by money. Some are seeking a change in lifestyle, others are looking for flexibility in their daily and weekly schedules, while many are keen to be their own boss.
But how much do you really know about the franchise you are hoping to buy? Does the business suit your preferred lifestyle? Would you be working with other people? And, if so, do you have good communication skills? Only by checking out the inner workings of a franchise, will you ever really get a taste of what makes the entire business tick.
What about other franchisees? Speak to a selection of business partners to understand the day-to-day nuts and bolts of the operation.
And then there is the cost of purchasing and running a business. Always look beyond the initial franchise fee. What other investment is required? What about premises, equipment, stock, staffing and salaries. What additional working capital is required and what is the total financial commitment? How does this fit in with your own budget?
Typically, for those able to work from home, the additional capital will be significantly less than for businesses that require premises, stock and members of staff. A ‘bricks and mortar’ outlet which sells food will probably have a relatively low franchise fee – perhaps £10k – but require greater overall investment.
Commercial leases and solicitor fees will also increase expenditure before the first pizza, kebab or burger can be sold. You may even require as much as £100k to get a business off the ground. Whatever you choose, you will need to plan for the short, medium and long-term. Many new franchisees will need to arrange a bank loan, or secure extra funding or be granted an extended overdraft.
But never rush into making a decision. Why not attend one or two of the franchise exhibitions that take place in the UK every year. This will allow you to speak face-to-face with franchisors. You can compare one business with another.
Collect as much information as possible from a selection of franchises, then take this material home and examine it at your leisure. And you will still need to do plenty of other research before coming to any firm conclusion.
You may also wish to talk to a franchise consultant. These are experts, some of whom will charge a small fee. However, many consultants are funded by members of the franchising industry, and will offer their services for free. They often act as a ‘middle man’ or ‘agent’, trying to find suitable partners for both franchisors and franchisees alike. Their job is to find the right fit for both sides.
As a budding franchisee, it is vital to develop a good early rapport with the franchisor. This personal relationship is an important part of the overall business. Building a positive relationship early on is critical and may well determine whether the franchisor decides to ‘award’ a franchise agreement to a new business partner.
So anyone who thinks a franchise can be acquired by making a few online clicks, and filling out the odd form, think again.