Franchise advice
At the heart of franchise success
Richard Holden says lenders are championing the industry and has tips for potential franchisees on the funding question
I
ndustry statistics show that there is a trend towards multi-unit franchisee ownership – and, within this, multiple
brand investment – with no signs of it slowing down. This has been the pattern seen in the US for several years, with a growing number of investors electing to operate significant clusters of businesses across one or more franchised brands. There are potential rewards for operating
a successful group of businesses, including speed of growth, economies of scale and operating efficiencies. It’s only prudent, however, that a very ambitious franchisee should not get too carried away with their development plans early on, as the skillset needed to run multiple franchise units is different from that of a franchisee operating a single business. Specialist franchising lenders, such as
Lloyds Bank, welcome entrepreneurial investors with the right mix of skills and ambitions to develop several units or brands, but, at the same time, we are continuing to focus on supporting the grassroots of UK franchisees to ensure that they stand the best possible chance of building a prosperous future. Whether you are a single-unit operator
or have objectives to set up in many locations, it is important that you develop a viable business plan to map out your route for accomplishing your goals. History demonstrates that comprehensive research and a robust business plan underpin each successful franchise operation. The business plan should be punchy
– applicants often fall into the trap of making it too detailed – and should grab
the lender’s interest. The presentation of the plan is important to create maximum positive impact and you should practise ahead of delivering it so that you come across professionally.
Bank managers will ask challenging questions about the plan and expect a business owner to be able to answer those questions confidently. It is, therefore, important that any business owner understands all aspects of their plan, including the financial projections and any assumptions that have been used. Make sure the bank manager has a copy of the business plan in advance so they can prepare for a meeting to assess the proposal. It’s a common misconception that a business plan is only needed to secure funding. While this is an important benefit of producing a business plan, it can also assist with the management of the business, such as monitoring the ongoing performance against the original benchmarks and identifying areas for further development and potential risk. The plan is a working document and should be regularly reviewed and updated as the business develops. Whether you’re looking to open a single
franchise or multiple units, your initial contact should be through your bank’s franchise team. Don’t go directly to your local bank manager as they may not have
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