The recruitment process is a valuable way to gauge the suitability of a franchise. The British Franchise Association explains why
You may read numerous articles and visit many websites and events that promote the vast amount of opportunities available in franchising, but before parting with any money you need to know the facts about an industry that employs nearly 600,000 people via 930 brands and over 40,000 franchisee operations.
Franchising’s profitability rates and levels of success consistently outperform non-franchise start-ups. In addition, the industry has demonstrated its robustness by growing throughout the last five years. However, all of this is only possible if franchises are operated in the correct manner - providing the right training, the right support and the right opportunity for the right people.
If you have found a franchise - or franchises - you are seriously considering investing in, you need to make sure the business is what it says it is. The first step is to see if the franchisor is a member of the British Franchise Association. If the business is, it means it has passed a strict accreditation process. However, you will also find that the recruitment process is a valuable way to gauge the suitability of the business.
All good franchisors have a recruitment process that will allow you to interview the company as much as the company interviews you. It ensures both parties fully understand each other and that a prospective franchisee is happy with the commitments, systems, support and operations they are being asked to sign up to.
What to look out for
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* Quality control. As a franchisee, you will be operating under a common brand along with other franchisees. You want to ensure other members of the network are just as conscientious about the protection and growth of the brand as you are. Therefore, be wary of any franchise that doesn’t seem that worried about how suitable you are for the business. If all they want is a pulse and a cheque, walk away.
* Company background. Every franchise needs to start somewhere, but they should be honest about what their experience of franchising is. Ask about length of operation, what their difficulties have been and how long they ran the business before they franchised it.
* The people. As one of its franchisees, you will have a close relationship with the franchisor and its staff - especially in the early days. You need to ensure you can trust and work successfully with them. It will make life a lot easier for both parties in the long term.
* Recruitment rates. How many franchisees has the business recruited in the last 12 months and how many is it looking to recruit in the next 12 months? What is important is whether you believe the franchisor has the right level of support for the network, now and in the future.
* Failure rates. Every network will have failures at some point, as buying a franchise doesn’t guarantee success. What is important is why franchisees fail. Was it because the market changed or the support wasn’t there? Was it because the system doesn’t work? Or was it because the franchisee didn’t follow the system?
* Franchisees. Those franchisees already operating in the network are one of the best research resources. Speak to as many as possible to get a realistic view of what life is like.
* Head office. Meet the franchisor at its headquarters. It could be anything from a home office to a large corporate set-up. Either way, it will help better inform you about the business and whether it matches with what the company has told you to date.
* Legal documents. You may be asked to sign a non-disclosure document, which is quite common. However, don’t sign it unless you have read and fully understood it. You will also be given a franchise agreement, a contract that binds the franchisor and franchisee. Do not sign this until you have had it checked by a specialist franchise solicitor - a list of these can be found on the bfa website (www.thebfa.org).
* Deposits. A franchisor may ask you for a deposit. If it is a bfa member, you can get this back if you decide not to sign the agreement and pull out of the process. However, the franchisor will be able to subtract a certain amount for costs incurred. Non-bfa members may take a very different approach. What to expect
* Timescales. The recruitment process is never just an hour-long meeting in a coffee shop or pub - if it is, think twice before handing over any money or signing documents relating to the business. Depending on the network and date of enquiry, the whole process could take anything from a couple of weeks to a year to complete. If the process is lengthy, try not to get frustrated. Instead, see it as a sign of a quality franchisor.
* Getting personal. From wanting to meet you at your home, to asking your spouse or partner to attend interviews with you, a franchisor will want to get to know you as a person. The company will want to see if the people around you are supportive of your plans to become a franchisee, whether you have the right qualities to succeed and whether you are organised in your private life.
What you want
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Be sure about why you want to become a franchisee. Is there a specific goal you want to achieve? Having a clear mind about this during the interview process will help you in your conversations with the franchisor.
When you want to leave
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Don’t be surprised if, as part of the interview process, you are asked whether you have an exit strategy. Some franchisors like to see if you have a goal you are working to, such as 15 years to build the business then sell and retire. You may not have a clear plan at this stage, but it’s worth thinking about, as it will help you decide what you hope to achieve.
Whether you choose to purchase a franchise or not, make sure you take your time during the recruitment phase. Be sure about what you want and don’t be afraid to ask difficult questions. Good franchisors will be encouraged if they see you are taking the process seriously and won’t want you to go any further if you don’t know what you are committing to.
Franchising provides successful, robust opportunities to run your own business using a tried and tested formula, upfront training and ongoing support. It has produced countless success stories, but all of these are a result of in-depth research and hard work.
