Franchise Advice Is it for you?
David Paulson of Tax Assist offers the following to those asking themselves: ‘Should I invest in a franchise?’
Trust and credibility are often the foundation to the decision-making process when buying goods or services and a potential client or customer will be more likely to trust a business that it has heard of before.
However…
Whilst the benefits of a franchise can sound compelling, franchising may not be for everyone and it’s something that you need to consider carefully.
Restricted to the business model The franchisor will be offering a proven, tried-and-tested business model but it is a business model that you will be expected to follow. You must be comfortable that the business model is one that you can operate within and that the potential returns from the business model match your own aspirations and goals.
Not for everyone
Not everyone is suited to being a franchisee. If you are the sort of person with a strong entrepreneurial flair that likes to challenge everything and doesn’t like to follow someone else’s model then we’d suggest that franchising may not be right for you.
Territory based A proven business model Y
The franchisor will have developed the business model to prove that it is viable and profitable. The more franchisees that are successfully operating within the network, the more proven the model is, therefore minimizing the risk to you.
Training A comprehensive training package to give you all the skills to run the business is essential in order to give you the best chance of success. Whilst you may have industry experience, the franchisor will need to accredit you as a franchisee to protect the integrity of their brand.
Funding It’s widely reported that for small businesses and startups access to funding is tough. For the right franchise, however, access to funding is often easier – because franchising has a lower failure rate than stand alone businesses, the banks are supportive of the industry.
ou’re considering becoming self-employed… but why should you invest in a franchise and is being a franchisee right for you?
Typically the franchise banks will lend 50-70 per cent of the total investment including working capital with a range of competitive facilities available.
Support
As well as the initial training provided, you will also benefit from ongoing support to help you grow your business. Typically, support will include: • Business development • Technical support • Field support • Regional meetings/conferences • Sharing best practice • Ongoing training • Research and development of new initiatives in the market
Buying power
As a franchisee, you can often benefit from the bulk buying power that a franchise is able to negotiate, passing those savings on to you. This will range from printing and stationery through to software and insurance, giving you real savings from exclusive deals.
Recognised brand
As the network develops so does the power of the brand, which will give you a competitive edge over the competition.
Whilst an exclusive territory grants you the protection that another franchisee cannot operate within your territory, it does also restrict the boundaries in which you can operate – marketing outside of your territory can put you in breach of your franchise agreement.
Locked in for a fixed term With a franchise you may be locked in for a fixed term so you will need to be comfortable with this and, before you sign an agreement, have done thorough research and due diligence to be sure that the business model is right for you.
Just because you’re investing in a franchise, a franchisor cannot guarantee that you will be successful. The variable is commonly the franchisee and a franchise is not a short cut to avoiding hard work; business won’t simply fall in your lap. Whilst the franchisor will give you all the tools and know-how that they have developed, it is up to you to implement it. Remember, you are not buying a job! n
DAVID PAULSON
David Paulson is senior manager for UK and international franchise recruitment at TaxAssist Accountants and is a British Franchise Association Qualified Franchise Professional.
October 2013 |
Businessfranchise.com | 17
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