There are five proven steps to help you choose the right franchise, Terence Nicholson, owner of Lawnscience, says
The latest British Franchise Association statistics highlight that there are 901 franchise brands in the UK alone. The contribution of franchising to the UK economy is over £15 billion, an increase of nearly 50 per cent in 10 years.
With this in mind, there are plenty of reasons why more and more people are choosing to invest in a franchise.
After the initial decision to invest in a franchise, the next step can be the most challenging - choosing which franchise to invest in. Making the right choice is crucial, but knowing where to start can feel overwhelming.
Comparing franchises isn’t easy. How can you compare a fast food franchise with a lawn care franchise? The skills required, day-to-day tasks, cost of the franchise and time needed to develop new skills all vary dramatically.
In order to compare which franchise to buy and make a worthy investment, you first need to narrow down your choices. There are five steps to help you choose and compare franchises:
Evaluate your costs
All franchises require an upfront fee. This cost covers training, equipment, rights to the branding and much more and are all variable, depending on the franchise itself.
Some franchises start as low as under £10,000, while others can be over £1 million. Many banks are keen to offer loans to those looking to invest in a franchise, particularly if you’re investing in an established, successful one.
Larger banks, such as NatWest and HSBC, have special franchise finance sections.
While you may be able to get a loan from a bank for the upfront fee, you will need to plan your long-term finances. Write a business plan and determine how much money you need to make year on year to be financially stable. Once you have a figure, your options for choosing a franchise will begin to narrow.
Narrow down the industry
Now that you have a figure and financial plan to work with, it’s time to think about yourself and your skills. Consider which franchise sectors are doing well and which offer work year round.
Forbes places personal services and lodging as two franchise industries with the most scope for growth. In the UK, children’s activities, food franchises and home maintenance all seem to be worthy investments.
Before you consider individual companies, you need to pick the sector and industries you’re interested in working in. Evaluate the type of work you want to do and where your strengths lie.
If you lack some of the knowledge and skills required for the sector, this shouldn’t be a problem. Many franchises offer in-depth and thorough training, meaning you can start in a new industry and your upfront fee will cover the costs.
Create your personal criteria
With costs considered and industries selected, now’s the time to narrow down your search and compare individual businesses. It’s important to note that everybody is different and we each have different criteria when choosing a franchise.
The question to ask yourself is: what is important to me? For example, if you feel apprehensive about learning everything about a new industry from scratch, look for a comprehensive training programme to be provided.
Working hours, location and being able to expand the franchise are also aspects some people value. What do you want personally from the franchise?
The financial plan has been created, industries have been chosen and personal preferences narrowed down. This means you can now start searching and comparing individual franchises.
The beauty of the digital age means an online search can reveal the franchises that meet your criteria. Look at the franchises that fit your criteria and interest you the most.
The next step is to reach out to the franchise and get the basic information. Make a note of the following differences in each franchise:
- Training provided (including if it’s accredited).
- Territory covered.
- Finding clients.
- Equipment provided.
- long-term support.
- Any other additional benefits.
One of the most important things to look for is the unique selling point. If a franchise doesn’t stand out and have a USP, is it worthy of your investment? Branding, competitive cost and 24/7 support are all valuable selling points that can be a big attraction.
If you like the information you receive from a particular franchise, you should then ask essential questions of the franchisor. Don’t be afraid to ask too many. Have any franchises failed? What do the upfront fees cover? How much annual turnover do you make? Can I look over the franchise contracts?
It’s crucial to talk to current franchisees of the business you’re communicating with. They will be honest about the business and will have gone through the exact same process. If they indicate anything that makes you feel uneasy, talk to the franchisor about it.
Any reputable franchise will actively put you in contact with its current franchisees. However, be wary of any that only give you specific names, as it might be connecting you with only positive franchise owners. Ask if you can have the whole list and choose who to call yourself.
Only through in-depth discussions with the franchisor will you be able to make a full business and finance plan. You need to determine if the financial forecast works for you. Crunching those final numbers can make a big difference in helping you decide which franchise to invest in.
Final questions and decisions
Any reputable franchise will help answer all your questions and will not pressure you into making a fast decision. You want to feel comfortable with the franchise owner, as you will be establishing a long partnership with them and their brand.
Ask yourself the following questions before making your final decision:
- >Can I afford this franchise in the long and short term?
- Am I happy committing to this line of work?
- Will I be happy with the lifestyle I have chosen?
- Is the franchise a success for others?
- Do I like the franchise business and owner?
Before you make any final decisions and sign any contract, it’s highly advisable to contact a British Franchise Association approved franchise solicitor.
They will have experience with these types of contracts and can highlight anything of concern. If you’re serious about investing and having a successful franchise, hiring an experienced solicitor is of the utmost importance.