FRANCHISE ADVICE
You get what you pay for…
Nick Williams asks, and solves, the age-old question: “Can you really get something for nothing?”
C
ritic and thinker John Ruskin said: "It is unwise to pay too much, but it is worse to pay too little. When you
pay too much, you lose a little money – that is all. When you pay too little, you sometimes lose everything, because the thing you bought is incapable of doing the thing it was bought to do. The common law of business balance
prohibits paying a little getting a lot – it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better.” There are very cheap ‘franchises’ that can be found but which are, in reality, nothing more than a business opportunity. To offer somebody the right to use their brand and their knowhow, provide training and the deliverable items to start the business and so on means that a franchisor has to ask for certain amount of money otherwise they will be subsidising you and that is bad business for them. So, if you only pay very little for a franchise there is every likelihood that it will only deliver very little back to you in terms of income or value or longevity. You may see it as a credit-card purchase, something to put aside if it doesn’t work out because you didn’t spend much – but you may as well have saved the money in the first place or focused on saving more to get quality.
"What really matters is selecting a franchise that will provide a full business model and good support"
Many articles are written every
year emphasising the need to take care and research deeply, and to take financial advice, and legal advice on the contract, before parting with cash. Yet every year we learn of people who have ignored this advice and have lost money. And, incidentally this applies to potential franchisors who also try to buy consultancy “expertise” on the cheap from quasi consultants who promise much but deliver little. In my view, what really matters to
a serious potential franchisee is that they, having researched the market thoroughly, select a franchise that will provide them with a full business model with good support delivered from a committed franchisor who has their interests in mind as much as their own interests. Anything less is a questionable purchase. I remember a number of years ago (having been in franchising for over 20 years) an advert in well-known weekly newspaper where the headline was ‘Start Your Own Juice Bar Business - £2,999’. This was at a time
when juice bars were very popular – on closer inspection it turns out that you purchased a machine that could squeeze oranges! Now that’s what I call taking the juice!
NICK WILLIAMS Managing consultant at Ashtons Franchising Consulting
www.ashtonsfranchise.com
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