Ashtons Franchise Consulting
ADVICE
Be in the best position Y
Nick Williams of Ashtons Franchise Consulting explains how you can protect yourself against unethical franchise offerings
ou would not buy expensive clothes without trying them on, so why would you invest in a
business opportunity without looking first at the benefits that investment will bring? Buying a franchise is just like buying any other business: you need to ensure that the company is sound and ethical, and that the investment you are making will be justified by the short- and long-term returns. One of the advantages of buying a franchise from a well-established franchisor is that you can talk to other franchisees and check the franchisor’s track record of support. But there is a process of due diligence you can carry out before you get to meet the franchisor.
Is the franchisor a member of the British Franchise Association (bfa)? And has the documentation been drawn up by bfa-approved consultants and lawyers? While not essential, this is a guarantee that the franchisor has reached certain standards and has made an investment in their business.
What are the company's values? It is becoming increasingly important to ensure that the franchise company is ethically responsible in areas of equal opportunities, human rights, environmental care and health and safety. Will the product do what the franchisor claims? Is it honest, decent and legal? And does it have a wide long-term audience?
Support is not limited to the launch, but should be evident throughout the life of the franchise
Does the projected financial illustration make sense?
Are the buying and selling prices of the product in line with the rest of the market? Does the franchisor business have a successful financial track record? Looking at Companies House will tell you a lot, and researching the market will quickly establish that the selling price point is in line with or near the market norm – too cheap and quality will be questioned, too expensive and your market shrinks.
What does the franchisor do to support their franchisees? A good franchisor will ensure that the new franchisee is properly trained in all aspects of the business, all aspects of franchising and their obligations under the terms of the franchise agreement. This support is not limited to the launch, but should be evident for the life of the franchise, with ongoing training, marketing and business development.
Do you feel comfortable with the product and the way business is done? Do the company’s values reflect your own? Does it excite you? Do you see yourself enjoying this for the life of the franchise and beyond? You need to have some empathy with the market you are entering, and an interest in the products or services that the franchise offers – if you hate driving do not buy a van-based franchise, for example. Maybe you will be in partnership with your spouse or partner – can you work together? Will you be proud to tell the world that you are a franchisee of this company?
And last but not least, can you afford to buy the franchise and pay your bills for the first few months? Borrowing to buy a franchise is fine as long you do not overstretch yourself. It is advisable to talk to an accountant early in the process to ensure that you will not find yourself sinking in debt. If you can satisfy yourself on these
major considerations then it is time to talk to the franchisor, get the finer details on the franchise company, the franchise offering and the long-term business plan, and, of course, get the best advice that you can. l
Nick Williams is managing consultant at Ashtons Franchise Consulting
BUSINESSFRANCHISE.COM 69
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