Do your homework before making an investment, Tim Bowyer, Metro Bank’s franchise business development director, says
Research suggests that the failure rate of franchised businesses is significantly lower than non-franchised business start-ups, meaning that large numbers of people are looking towards franchising when starting up their own business.
The journey to becoming a successful franchisee can be made easier by applying a few simple rules to the process, taking appropriate advice from relevant professionals and, most importantly, doing your homework.
Risk assessment
A good starting point is to carry out a risk assessment on yourself in conjunction with friends and family. What are your personal circumstances? What are your strengths and weaknesses?
This should help you decide whether to consider an established franchise concept with a considerable number of franchisees or a relatively new franchise with only a handful of franchisees. Both options present different risks.
Once you’ve identified your preferred franchise, it’s vital to visit the franchisor’s premises to see how the business works and talk to those involved in the business.
Make sure you establish what support is available to you during the first challenging few weeks and ask for a list of existing franchisees to speak to.
Prepare a list of questions, such as:
Franchise agreement
Often you will not be provided with a franchise agreement at the first meeting and may be asked to sign a confidentiality agreement.
When you do get a copy of the agreement, remember to seek appropriate legal advice from a solicitor who is an affiliate member of the British Franchise Association.
There may well be other questions you feel fit your own personal circumstances, but what is important is the preparation before you meet your chosen franchisor, as well as the time you take afterwards to review the answers that were given.
Buying into a proven business format franchise that’s been piloted in the correct way does not guarantee success. Research remains vital. Take your time, involve others and always seek out advice from the experts.
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