Franchise Q&A
Chris Davies
Franchise consultant at Ashtons Franchise Consulting
Q: How can I identify a good franchise business from a bad one?
A: When evaluating a franchise the franchisor should have spent time and money in researching and developing their operating systems. These should be tried, tested and proven, and easily transferable to franchisees.
When investing in a franchise, you are not just buying into the product or service provided, you are also buying into the people behind the brand. Do they have
the relevant experience in their market? Has the company been operating for an acceptable period of time prior to off ering franchises? The norm is from at least 18 months to two years.
When assessing franchisors, research the company to ensure that you are comfortable with their background and aspirations. Important points to consider include:
• The trading performance of corporate outlets or offi ces
• The trading performance of franchisees • Recruitment targets • The support services provided • The success rate of franchisees • If the franchisor is a member of the British Franchise Association (bfa)
• Meeting with franchisors at their head offi ce to get a feel for their operation
• Being well prepared for the meeting and demonstrating that you have done your research
• Speaking with existing franchisees • Seeking professional independent advice.
To ensure that it is fair to you, have franchise agreements and franchisor business plans reviewed by specialist lawyers and accountants. To increase your chances of success, try to attend the bfa seminars, or those held by the banks. This will help you understand how to eliminate unsuitable franchises and invest in the right one for you.
Jane Masih
Director and head of franchise team at Owen White Solicitors
Q: Will the recent Brexit decision have an impact on my plans to buy a franchise?
A: No one can predict the economic future with certainty. One thing that is clear is that the legal ramifi cations of the European Union referendum will take many years to be revealed.
For a business based in the UK, the laws that apply to franchising remain very
much in force. The formal process to leave the EU requires the UK government to invoke Article 50 of the Treaty on European Union. When that takes place there will be a two-year period in which the formal negotiations to leave will be conducted. All EU laws that have been incorporated into
English law will continue to apply until such time as the UK government decides to make any amendments.
The best advice for anyone considering entering into a franchise opportunity in the current political climate is to approach the decision in exactly the same way as you would have done before the referendum. This means take independent legal advice on the terms of the franchise agreement and speak to an accountant to evaluate the fi nancial information provided by the franchisor.
While a decision to leave the EU is likely to have implications in the long term for many businesses, many would regard basing a decision not to proceed purely on the outcome of the referendum as an overreaction.
September 2016 |
BusinessFranchise.com | 51
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