Franchise Advice
Six steps to franchising
Nigel Toplis on how to prepare before meeting the franchisor
of head-offi ce support and are part of a network of people who can share best practice, advice and insights. The franchisor is there to provide both guidance and advice, plus training, marketing tools, programmes and technical and sales support throughout your period in the franchise. But with almost 900 business format
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franchises in the UK, how does a prospective franchisee select the right franchise? It can be, therefore, both diffi cult and confusing at times, and it is certainly something not to be rushed or done on the spur of the moment.
Essentially there are three aspects to consider: 1. What research you need to carry out and how you prepare for a meeting with a franchisor
2. Proving to a franchisor that you have the wherewithal to run their franchise
3. Assessing what a franchisor is looking for in a franchisee
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Businessfranchise.com | April 2012
ranchising is not always the easiest thing to get into. You have to ask yourself questions such as: ‘where do I start?’, ‘who can give advice?’ and ‘what business can I open?’.
With franchising you receive the benefi ts
In researching, there are six steps to selecting the right franchise:
Step 1 Assess Suitability A good franchise should have a proven
business history, documented systems, effective training, security of tenure, and an ongoing support structure.
Step 2 Investment A franchise is an investment – it is not a job.
You need therefore to determine exactly how much you need to invest and most importantly how much you’ve actually got. There is no point taking on a business that will only generate half the amount you need. Also beware of over-extending yourself – be sure you can raise the requisite funding and make the repayments through the business. Franchising does mean you have to invest – not only time and energy, but also money. However, you might be surprised just how much you have, or can gain access to once you begin to consider your fund-raising options, be it cash, savings, shares, equity in property, family help etc.
Step 3 Research the Industry Evaluating a franchise is really all about
asking questions – the right ones and lots of them. When considering which industry to get into, ask yourself the following: Is it a
good market? Can demand be sustained? Is the industry growing or declining? Do a few key players dominate and if so, do they compete aggressively? How do competitors build market share? Do other industries have products and services that could make inroads into this one?
Step 4 Compare the
Franchisors By now you will have narrowed down a number of franchise companies that meet your requirements. Now you need to compare and judge each opportunity. Analyse each franchisor by consulting resources such as the British Franchise Association (bfa), Companies House and franchise magazines and asking the following questions: Are there any other franchisors in the industry and if not why? Is your preferred franchisor the largest operator? How often does a consumer buy the product or service? Do the products or services enjoy repeat business? What is the typical value of a sale and the typical profi t? Does this franchisor seem profi table? Does this franchisor offer the best potential for growth?
Step 5 Seek Advice It is imperative that you seek professional
advice when thinking of buying into a franchise business. A qualifi ed adviser can assist you in understanding the small print
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