Franchise advice
Ready for take off? Franchise selection is a little like taking a holiday – says Nick Williams I
t recently occurred to me that, broadly, people fall into one of two categories when it comes to booking a holiday.
In one camp, there’s those who like the certainty of destination, being able to review it online, using a familiar airport and potentially even choosing to go to the same place they know love and trust. Unadventurous but secure. On the other side, some buy a last- minute holiday, the hotel location uncertain until arrival. Foolish or free- spirited? Fun or living a fantasy? Certainly, that holiday will be an exciting ride – you may get great value and an experience you will never forget! To choose a franchise is to set off on a
voyage of discovery. It not only involves a considerable monetary investment as well as hopes and expectations for the future, but also, for many, the decision will be informed by their family responsibilities. Plus, like a holiday, it’s a decision to be taken with care so that the outcome will be positive, the experience memorable and all parties involved are happy with what has taken place. So, when choosing your franchise, what
sort of consumer are you? What will lead you to the kind of decision you make? The franchise business that you’re planning to invest in should hold a marketplace position where consumers like the product or the service and have sufficient points of difference around it to make the business attractive to succeed against competition. The franchisor should be able to demonstrate levels of customer satisfaction in order to reassure you that you can bring the business to your area with an expectation of local market interest. Let’s consider, however, the pros and
cons of a newly established franchisor versus one that has been there for some while.
An established franchise will have
a track record of success, which means you can find out what experience the network has had, can speak with franchisees, and be comfortable with the package and the support being offered. A network of established franchisees tells you that the business works. You have to be certain, however, that the franchisees are happy on an ongoing basis and not that they are unprofitable, miserable or looking to get out of their agreement because of a breakdown in their relationship with the franchisor. It is a reasonable expectation that an established franchisor will have a management team in place, a training process that works, and a product or service that they are constantly working on to improve so that you, the franchisee, can be at the forefront of your business sector in your territory. The franchisor will be comfortable in selecting the correct franchisees and should be well regarded, with active social media accounts that you can investigate – both as a potential customer and as a potential franchisee. The brand will have established its
logistics trail and will have a shop-fitting company in place, or a vehicle or product or equipment supplier base on which you can rely. In short, it will have been around long enough to do things well and to show that it is doing well. The established franchisor is always looking to grow, but it may be that their most attractive trading territories have already been awarded or that the area in which
you live has no vacancies. It may be that their attitude to recruitment has become complacent and that on applying to join you gain a feeling that you are ‘just another potential franchisee’. It may also serve your purposes to ask whether the brand has attained British Franchise Association (bfa) membership and to what level. Turning to newly established
franchisors – what can they offer you? Their background in franchising is very limited, their track record as yet unproven. They may not yet have fully developed their experience and understanding of recruiting, supporting, training and developing franchisees – so why would you want to join them? This is where the similarity with the
adventurous holidaymaker comes in – you can do a certain amount of research but ultimately you are taking a bit of a chance based on your own judgement and your feeling about how interesting the journey may be. A newly established franchisor can
still show you that customers like and use their product or service. They can still show you profitability. You would be wise to enquire whether the brand has the support of lenders when it comes to funding franchisees, because banks will always want to vet a new franchisor, their documentation and their background, before lending. It’s likely there has already been a little third-party review undertaken
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