This page contains a Flash digital edition of a book.
BANKER’S ADVICE


Franchisees need clear guidance before signing


ByRichard Holden, Lloyds Banking Group


whether they are embarking on their first business venture or have 20 years’business experience under their belt. There are numerous factors to be considered before signing on the dotted line. It is important that the risks and requirements of owning a franchise are clearly outlined by the franchisor to ensure that thorough research is completed before any decision is made. Many potential franchisees turn to the


C


BFA for initial guidance. There is a wide range of information available online for prospective franchisees, although not all of it is as comprehensive as it could be on some websites.


A thorough franchise research guide for potential investors that is approved by the BFA and widely promoted by its memberswould encourage franchisees to make better investment decisions. A good starting place is letting the franchisee know what he is signing up to. It will not be common knowledge to him that operating a franchise involves procuring a licence to use intellectual property from one party - the franchisor - to another party - the franchisee - with a predetermined series of ongoing commitments between both sides. The need to follow the franchisor’s systems, such as how the brand’s product is supplied and its accounts are run, is essential for the franchise to be a success. Awareness of this from the outset makes it clear to franchisees that they will not be able to make major changes to the running of the brand, allowing them to consider whether this business structure is the right fit for them. It is crucial that franchisees choose to join the right franchise. Thorough research of the sector they will be entering is vital, and avoiding fad markets and


hoosing to invest in an established franchise is a big decision for anyone,


investing in a credible, proven brand improves the likelihood of success. Getting to know the franchise is


just part of the process for a potential franchisee. It is advisable for him to meet a BFA-affiliated lawyer and accountant, who will have franchising experience and understanding, and can independently check and explain the franchise agreement before anything is signed.


Once they have found a distinctive franchise that they are eager to get involved with, many franchisees need to secure funding to enable them to pursue their investment plans. Approaching a bank like Lloyds TSB Commercial that has in-depth understanding of the franchising markets ensures they receive knowledgeable guidance and support that is tailored to fit their needs.


Confidence For many franchisees it may be the


first time they have approached a bank for lending, and it is important that they know to come prepared with a detailed business plan that clearly outlines their objectives and strategy. They must have this to enable them to confidently answer any questions from the bank manager. It is good practice to send a copy of the


business plan to the manager two or three days ahead of the appointment to allow him to become familiar with the content. At Lloyds TSB Commercial, we continue to approve 80 per cent of customers’requests for loans and overdrafts, and have a range of funding options, which includes the recently launched Lloyds Funding for Lending. This utilises the Government’s Funding for Lending Scheme, and enables businesses to benefit from lowered funding costs on loans and offers a one per cent reduction in the interest rate for new business loans.


●Richard Holden heads the Lloyds Banking Group franchise unit and is an expert speaker at exhibitions and seminars. He also regularly contributes to the national and trade press. The group has franchise managers throughout the UK offering support to both franchisors and franchisees.


Whilst this information is familiar to franchisors, it is essential that guidance is provided to arm franchisees with a clear understanding of the terms, systems and costs that come with setting up a franchise. Standardisation of what information


prospective franchisees need to consider will ensure that there are no gaps and investors are better placed to make the right decision for themselves and ultimately, the franchisor.


i 07802 324 018 franchising@lloydstsb.co.uk April/May 2013 www.franchiseworld.co.uk 27


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60