Pip Wilkins, chief executive of the British Franchise Association, reveals all
If you’re going into business under someone else’s brand and systems as a franchisee, it’s good to know the standards you should insist upon. If you don’t see the following, think twice before investing your money:
Franchisors should have a track record in business, backed up by proof of their success.
You’ll be given financial projections when you’re researching, what you can expect to turnover and profit as your business develops.
A key tenet of the British Franchise Association’s accreditation process for franchisors is proof of what these forecasts are based on. Accounts must verify that they have been achieved, either by other franchisees or a company owned outlet at the same stage of its development.
You’re looking to replicate proven success. Ask for the evidence that forecasts are accurate and feasible. Any franchisor worth your time and money will show you.
As a franchisee, you’ll be operating under a common brand together with other business owners in the network. That’s one of the biggest strengths of franchising - a collaborative group of people sharing ideas and experiences for communal benefit. It’s also a collective responsibility.
Therefore, you need confidence that franchisees, as well as the franchisor, are conscientious about the quality control of that brand, which begins with the latter having rigorous selection procedures for who can join the network in the first place.
It should be a two-way due diligence process. Expect, and welcome, in-depth questions about who you are, the skills you have and what’s motivating you to become self-employed.
If all a franchisor wants from franchisees is a pulse and a cheque, it’s time to look elsewhere.
Openness from both parties should be the norm from the outset. You should be asking plenty of questions during the process of researching the opportunity and expect transparency on the answers, not the feeling things are being hidden from you.
That includes open disclosure of information on everything from business and culture, fees and support to financial potential, daily operations and the communications channels used in the network. Good franchisors want to see you explore all aspects of their franchise.
Remember, speaking with existing franchisees is a great way to verify what life in the network is like and check you have the full picture before investing. When they mirror what you’ve been told by the franchisor, you can have confidence in the way the network is run.
The people you’re dealing with are a vital part of a prospective franchisee’s research process. Not only will they be the ones supporting you in your franchise, but they also drive the culture of the brand you’ll be operating under. A franchise network is a reflection of the people leading it.
Consequently, their background and approach - to the business and their franchisees alike - are hugely important. If you feel your relationship is built on trust and honesty from the beginning, that’s a good sign of things to come.