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PANEL OF EXPERTS
Q: As a potential franchisee, how can i make the
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e
most of a franchise exhibition?
SARAh WALkER relationship that you like and trust them, so make sure you
PR & Marketing Associate and Franchise Partner, spend time talking to them to get a real feel for who they are,
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e
a
d
v
Platinum Property Partners their values and principles in business.
A: Before the exhibition, make sure you’ve really Go to as many free seminars as you can – again, this is a
f
r
a
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thought about what you want from a franchise. great opportunity to see your potential franchisor in the flesh,
You need to be clear on what level of funds speaking passionately about their business and bringing to life
you’re able and prepared to invest and the kind of the benefits it can offer you. Many stands will also be manned
lifestyle you want and the financial returns you’re by existing franchisees, so talk to them and ask difficult
looking for. Exhibitions are a great chance for you to meet the questions so that you get a full picture of the good and the
people behind the franchise – founders, directors and key team not-so-good aspects of running their particular franchise.
members – people you would not otherwise necessarily be able And finally, remember that the franchisor is likely to be
to meet at the first stage of considering a franchise, so don’t sizing you up as much as you’re sizing them up! A franchise is
waste the opportunity. not something you ‘buy’, you’re ‘recruited’, so if you think a
These are people you’re likely to be in business with for at franchise sounds interesting, really sell yourself to the people
least five years and it’s vital to the success of the business on the stand.
PETER WiLLiAmS Having established the extent of your buying power you can
Franchise Consultant focus on the franchisors within your budget. Best policy is to
A: Firstly, some preparation is recommended. The start with an open mind and inspect the wide range of
majority of people who become franchisees take businesses on offer. You are on a fact-finding mission and to
advantage of a business financing package from one of gain as much information as possible, enabling you to form the
the major banks, therefore you need to be clear about right impressions, do take the opportunity to have a chat with
your financial position, taking into account your liquid capital all the franchisors within your price bracket. Additionally, it’s
resources plus equity in property which could provide security for a important to attend the free seminars where leading members
loan. Cash liquidity of, say, £25,000 could be at least doubled to of the franchise industry speak – and invite questions – on a
facilitate the purchase of a franchise costing £50,000 or more, pro-rata variety of subjects all highly relevant to your prospective future
according to individual circumstances. as a franchisee.
Q: how do i go about securing funding?
NigEL TOPLiS Additionally, you should give thought to other forms of funding –
Managing Director, Recognition Express and you would be amazed by how much you will be able to raise from your
ComputerXplorers own arena – extending your mortgage; cashing in investments; loan
A: A number of the high street banks have from family members and so forth. There are other loan companies,
specialist and experienced franchise departments too, who will also look at franchising, such as a lease financing group.
and they should be on your short list of people to Whichever route you choose, ensure you are comfortable with the
approach – always see more than one and compare interest rates; lender; that you have compared at least two lenders and, most
payback period; free banking terms; capital holiday and secured/ importantly, that you neither over-extend yourself nor under-
unsecured options. capitalise the business.
CAThRyN hAyES for obtaining finance. Your franchisor will help, but you need to
Head of Franchising at HSBC understand the figures and take ownership of the plan.Potential
A: Most of the major banks have specialist franchise franchisees are likely to be considered more favourably than a
units you can talk to. HSBC has had a dedicated conventional start-up, however, the bank will still carry out a
franchise unit for more than 25 years.First of all you thorough assessment of your proposal.
need to research your chosen franchise carefully, It is important to consider the financial implications carefully
making sure it is right for you. HSBC has a comprehensive before buying a franchise. You are entering into a long-term
Starting a Franchise guide, which can assist you with this. For a commitment and need to get the finance right at the outset.
free copy, go to
www.hsbc.co.uk/franchise. Your bank manager will work with you to put together a
You also need to ensure you can afford to purchase your finance package that suits your individual needs.
chosen franchise and that it offers a good return on your
investment. For an established franchise, most of the major
banks will lend up to 70 per cent of the start-up costs, for new
franchises around 50-60 per cent.
Email your questions for the panel to:
The next step is to prepare a business plan, including cash flow
editor@businessfranchise.com
forecasts for the first couple of years of trading – vital documents
www.businessfranchise.com April 2010
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