Suzie McCafferty, managing director of Platinum Wave, explains how to prepare to meet a franchisor for the first time
Do your homework. There really is no excuse for a serious applicant not to. In contrast to what was happening 10 years ago, the franchisor who keeps his cards close to its chest and only drip feeds small amounts of information to prospects, especially with regard to total costs, case studies and the like, is unlikely to get many inquiries.
Now, franchisors work on the basis that today’s applicants expect to be able to find out all about a business and without too much laborious digging. From our point of view, when we speak to prospective franchisees who have clearly only glanced at the client’s home page or half read a listing, it doesn’t fill us with confidence that this is a serious applicant with a genuine interest in the brand.
Read everything you can find
Our advice is always to read everything you can find. Visit the company’s website and read both the corporate and franchise information. Check for case studies, Google the directors and see what comes up, check out their LinkedIn profiles and hunt for expert opinion pieces.
Are they leaders in their field? Do they have an inspiring track record? Are they on Facebook, Twitter or Instagram or do they have a YouTube channel? Is the franchisor a British Franchise Association member? What franchise portals does the company advertise on? How up to date is everything?
How you feel about what you find is entirely up to you - it’s all there to help you form an opinion about what the franchisor does, how it does it, who it is and what it offers franchisees. Does it make you want to move swiftly on to the next one or pick up the phone to find out more?
What you won’t find during this initial research, however, is precisely how the business works. Rightly so, as this is kept secret until you get into detailed talks with the franchisor and a non-disclosure agreement has been signed.
There should be enough to whet your appetite, but not so much that you’ll feel like heading out the next day and doing it for yourself. Once you feel like you’ve found out all you can about the franchisor, get yourself prepared to let the company find out everything it needs to know about you. And be warned, things could get personal.
Can you afford it?
Pretty early on in the conversation, the franchisor will want to establish if you can afford its franchise. That’s quite personal and some people find it uncomfortable, even rude, to be asked questions about their personal finances, but the franchisor needs to know if it’s dealing with someone who can see it through.
We think it’s vital these conversations start early on, and with honestly, because otherwise both sides are potentially wasting their time and setting themselves up for disappointment.
The other very personal topic will be your family circumstances. Sometimes, this might be to gauge a person’s outgoings and commitments.
In an extreme example, if a candidate has just lost his job, has minimal savings, three children in fulltime education and is the household’s only income provider, then while that’s certainly a pretty powerful motivation to make a success of the franchise, the franchisor may feel the model could not deliver the kind of returns quickly enough to support the applicant’s financial commitments.
Another common reason to look more closely is to gauge the level of support at home.
Is the applicants partner in favour of them taking on the franchise? Are they prepared for the amount of work the franchisee will be undertaking? Are they understanding of any potential short-term loss of earnings or using savings to buy the business?
Franchisors ask these questions not to be nosey, but to try and encourage openness between all those who may be affected by the franchisee’s decision.
Building a business is tough, no matter how much support you get from the franchisor. It can be exhausting and naturally carries a financial risk, so most franchisors would rather know their franchisee won’t be going home to: “I never wanted you to do this in the first place!’ when the going gets tough.
Top 3 tips for taking the first steps with a franchisor
- Get your finances in order first. How much have you got to invest? How much/what are you prepared to risk? What do you need to earn? Would a bank actually lend you money and if so how much? Speak to your bank, accountant and family. You’re considering starting your own business, so you can’t have any grey areas around your finances.
- Don’t let yourself be talked into anything by anyone else, especially a franchisor you’ve literally just met. If you’re an excellent candidate and the territory is sitting there ready for you, then of course the franchisor will be keen for you to start, but be wary of anyone trying to set a pace you’re uncomfortable with. It’s your future and your decision, so take your time and get it right.
- Research. Read everything you can find about the brand you’re interested in. Go and see the company if it’s exhibiting at a franchise exhibition. In fact, go anyway and get some face to face and impartial advice from the British Franchise Association - and listen to that advice. It can give you a list of all the other people qualified to give you advice - from the banks to solicitors to consultants.
Knowledge will be key to you finding the right franchise, being offered a franchise and deciding whether or not to accept. Do everything with your eyes wide open and if you’re unsure, ask.
About the author
Suzie McCafferty founded Platinum Wave in 2010, after gaining more than 10 years’ experience in the engine room of franchising, first as a franchisor who built her own retail brand from a single store to a network of over 60 outlets in six countries, then as the franchise director and board member of a multi-million pound division of a recruitment plc.
She is the chairperson of the British Franchise Association’s Scottish regional forum.