Pip Wilkins, chief executive of the British Franchise Association, explains how the governing body assists prospective franchisees
The British Franchise Association has been representing franchisors since 1977. Initially set up as a platform to represent ethical business format franchising, this meant those businesses with a viable proposition could separate themselves from those that were not so viable.
In order for a business to achieve membership, it has to undergo an accreditation. This involves reviewing the business model, all core documentation to support franchisees throughout the business, along with the market proposition and ongoing development mechanisms.
The process can be lengthy and most do not meet the standards right away. Whether or not a brand passes its accreditation on the first attempt, it’s important to remember that on becoming a member the business has chosen to meet the standards to improve quality and performance for its network.
The bfa today has expanded its representation to include franchisees of its franchisor members, professional advisers and suppliers to the franchise industry. This creates a unique community comprising a wealth of knowledge and experience.
What this means for you
If you’re keen to explore franchise opportunities, due diligence is critical during your search. You need to ensure the business will provide you with a return on investment and an opportunity that meets your expectations.
A bfa member franchisor will have, at least, committed to operating in an ethical way, suggesting that the attitude to do the right thing for the brand and network is present. However, this doesn’t mean that if a franchisor is a member, you don’t need to ask any questions.
You should feel confident that you can work with the people and operate as the model requires in order for you to achieve your desired income. Also, be clear about the training and support you will receive. The only way to analyse the opportunity is to complete further research on the above.
There are three categories of franchisor membership:
Provisionally listed are companies that have proven their business models work by way of a pilot or company owned outlet. They may not have franchisees yet, but have all the tools in place to support a network.
These opportunities can be rewarding, as sometimes the franchisor offers more support and allows more input from the franchisee to strengthen and build on the existing model.
Associate members have proven the model as per the provisionally listed category. However, associate members have also had at least one franchisee trading successfully for a minimum of one year. This is the minimum requirement for this category.
However, franchisors can remain in this category for a considerable time - even those with networks of 30-50 franchisees. They cannot move into full membership until they have reached critical mass.
Full members have evidenced critical mass. This means they can financially support the running of their franchise entirely using the income derived from ongoing franchisee fees alone - this is the management service fee, not the initial investment.
These members often continue to recruit, but don’t need to as the franchise is self sufficient.
Unfortunately for you, the franchise industry is not regulated, which can present a challenge when looking at investment opportunities.
The bfa recommends you ask a franchisor a number of questions to support your due diligence. You can access these on the bfa’s website (www. thebfa.org), along with other helpful advice and a full list of accredited members.