Let’s go back a bit though, why would you even consider buying a franchise, is it worth leaving a steady job with salary and perks and take the risk of running your own business? Some will undoubtedly say no, that is a risky venture, and it certainly won’t be for everyone.
However, all the research seems to point to an increasing number of workers feeling unhappy and underappreciated in their roles (according to Gallup’s State of the Global Workplace 2023 report, nearly every UK worker (90%) is unhappy at work!) and it seems that many are dreaming of taking more control of their future and setting up on their own.
We know from the statistics that a high number of small businesses just don’t survive and yet according to the British Franchise Association (bfa), the data shows 93% of franchisees claiming profitability and less than 1% of franchises closing per year due to commercial failure. Franchising contributes £17.2 billion per annum to UK GDP and employs 710,000 people so it is a sizeable sector, incorporating a wide range of industries and business types.
So, exploring franchising as an option if you are considering starting your own business makes sense, as it can be a great way to start, making sure that you have a format and structure to operate, instead of having to work things out for yourself.
The bfa website (www.thebfa.org) is the best place to start, with details of the franchises which have been put through the bfa accreditation process, signing up to the Code of Ethics. There are resources to help you, including a list of questions to ask a franchisor and a free online training course for prospective franchisees.
There are many different franchise opportunities available but as you research franchising, you can start to narrow things down, making some decisions about the type of franchise you are interested in.
Maybe you would prefer to start a franchise with a well-known brand, possibly in the fast food, coffee shop or other high-profile sector. This will generally mean that start-up costs will be higher, and your franchisor will be a corporate so you will be unlikely to have a close relationship with the owners of the business. Or you might be more comfortable as part of a smaller network, where there is more of a ‘family’ feel and less of a corporate approach. Franchising covers such a wide range of business sectors that there really is something for everyone.
Either way, you will need to check out the franchisor’s financial strength, get the legal contract reviewed and research the industry sector the business is in, as well as having some conversations with existing franchisees.
Buying a franchise means that you are committing to a long-term relationship, so it is worth making sure that you are signing up for the right one!
Some of my previous articles have covered the research you should do, as well as preparing a business plan, and this is certainly something you need to do before parting with any money. However, as well as the all-important research and planning, you should also consider some other franchisor attributes before you sign up and agree to buy a franchise.
- Sector expertise. How active is your franchisor in the sector that the franchisees are operating in? Do they run their own operation as well, so they can see how the industry is changing and developing? Nothing in business stands still, so having an active franchisor supporting you in understanding and dealing with sector challenges is vital.
- Experience in franchising. One of the key benefits of franchising is that the franchisor is providing you with a tried and tested format, after building up a successful operation first. If it is a newer franchise without a core business already established, you need to look carefully at how much support they will be able to provide.
- Consistency. As you conduct your research into the franchise and go through their own vetting process, you should have several conversations and meetings along the way, often with a few different people. Are you getting consistent messages about the way the franchise operates, especially around those key areas of support and training? Does this give you confidence in the way you will be trained and supported?
- Values. Shared values play a huge part in a franchise relationship but often they are not actively discussed. Do you know what the core values of the franchise include? At Revive! one of our values is Outstanding Customer Service and that is discussed at the very first meeting to ensure that all franchisees buy into this as an integral part of the way our business works. Strong franchisors want to recruit franchisees who will commit to their values, as they will act as an extension of the brand in their local territory.
- Longevity. The legal agreement you will sign could be for five, ten or even twenty years so this is all about forming a long-term business relationship. Ask your franchisor about their future plans and ambitions for the network, how do they see the business progressing and growing?
- Honesty and integrity. It should go without saying, but this is absolutely vital. You need to have confidence that the franchise you are investing in has been accurately presented and that you can rely on what you are being told. Don’t be influenced by glossy marketing information or super-slick sales presentations, look for the facts and figures. Buying a franchise is a big decision which shouldn’t be rushed into. Trust your instincts along the way but also look carefully at all the information you need to make an informed decision.
You can’t prove beyond all doubt that any business decision will be the right one, but if you are confident that you have done your research and that your chosen franchisor has strong values, plus experience, consistency and most importantly, integrity, you will have a much better chance of effectively building a long-term relationship and a successful franchise business.
