Expert advice from Suzie McCafferty, managing director of Platinum Wave
Oddly, there seems to be a prevailing public misconception that becoming a franchisee is a simple matter of picking the model you want and then paying for it.
Franchisors are - and absolutely should be - very selective when it comes to choosing who does and doesn’t get to join their network; the future success of the brand depends upon it. So what factors do franchisors consider when assessing an application from a prospective franchisee?
Suited to self employment
Firstly, they have to believe you’re going to be suited to self-employment. It’s not for everyone.
If you’re used to a steady salary every month, paid holidays, an expense account and sick pay, the realities of self-employment can come as quite a shock. It’s a level of responsibility that most people would rather not have.
In most franchise models, it’s not simply a case of doing a good job from week to week - you’ll often need to learn to wear a menagerie of hats like sales director, head of marketing, HR manager and credit controller. It’s worth noting that in most instances the more of these functions the franchisor provides for you, the more you will pay in fees, etc.
An understanding partner
Do you have the support of those closest to you? It’s incredibly important that your family is 100 per cent behind you.
When you’re building your own business, it’s almost impossible to simply leave it behind you at 5.30pm and head home without thinking about it again until 9am the next day. Long hours are pretty much mandatory, working weekends is common and forgoing family holidays and new cars is the norm until you have firmly established your business and made it profitable.
Don’t get me wrong, the hard work and sacrifice should be well worth it in the end, but let’s just say an understanding partner is invaluable, if not essential.
Following the system
Can you follow a system? The secret to franchising is that the franchisor has developed a set of systems and procedures, which if followed properly should make the enterprise successful and profitable.
There’s little room therefore for the true entrepreneur, who will invariably want to go off in their own direction, changing the model and ignoring procedures. This is not to say that franchisors are looking for robots, but following the system and respecting the brand are non-negotiable.
Can you sell? There’s no escaping this one when you have your own business.
Sales runs through the heart of any business. You need it to find and keep new customers, borrow money from the bank, outsmart your competitors, hire the best staff and negotiate with suppliers or property agents.
Your franchisor will help you get better at selling and practice as they say makes perfect, but a prospective franchisee who’s terrified of sales is unlikely to make it past the first interview.
Do you have sufficient funds? Banks like good franchise models and when presented with a great business plan from a strong candidate hoping to buy a franchise they know and understand, they have been known to lend up to 70 per cent of the total set-up and purchase costs.
Even with that kind of lending support, you will still need some degree of liquid capital and it’s vital that franchisor and franchisee go into the venture knowing the money is there to support the business until it’s profitable. Cash is king and a responsible and ethical franchisor will want to make sure you have what they know you’ll need.
Lastly, a franchisor will need to be satisfied they can work with you on a personal level and that you will integrate well into the existing network.
Conflict is to be avoided at all costs in franchising, as there’s rarely a winner and the time wasted on it is never repaid. Equally and for the same reasons, you need to consider how you will work with the franchisor - you don’t need to be new best mates, but you should be on the same page ethically.
If it doesn’t feel right at the beginning, my best advice to both sides is to walk away.
If you’re serious about investing in a franchise, then like any big decision you should go into it with your eyes wide open. There’s plenty of great advice out there to help steer you in the best direction and the rewards when you get it right can be plentiful.