Thorough research will help you make an informed decision about which franchise to invest in, Richard Holden, head of franchising at Lloyds Banking Group, says
Basing any decision on assessing the facts, implications and potential consequences will give you a clear appreciation and understanding as to the best possible outcome and ensure you make the right decision more often.
The impulsiveness of acting on a whim and with little consideration of the consequences will more often than not lead to decisions you will regret down the line.
There is an old saying that ‘A little knowledge is a dangerous thing’ and there’s a certain truth to this phrase when deciding whether franchising is right for you. In order to make good decisions, you need to gather all the facts to be able to fully evaluate them.
It therefore amazes me how often people approach me for assistance in setting up their new business without having undertaken the in-depth analysis required to give them the best chance of building a successful business.
There are some reports that state failure rates for new start-ups are as high as 90 per cent and while the evidence for franchised business has demonstrated a much more successful route into self-employment over many years, there are still people who are unable to make the proven franchise model work for them.
Unfortunately, in many instances this is down to the individual themselves, rather than the actual business model, which often has successful franchisees operating elsewhere.
It’s highly unlikely that any new business owner has all the skills they will require from the outset. Jumping into the deep end for the first time and expecting to swim like Michael Phelps is improbable.
Every franchise, therefore, offers some initial training and ongoing support to investors. The level of training and support varies according to the franchise brand and this should be high on the list of considerations for any would-be investor.
Personal development is often overlooked in this busy world we live in. However, there’s enormous benefit in acquiring new skills and sharpening existing ones to increase productivity and make better informed decisions. If shortcomings and weaknesses are addressed, then naturally performance improves.
Most people starting out in business for the first time have limited understanding of financial accounts, so it would be prudent to gain some knowledge before starting your business.
The route to self-employment has just been made easier, thanks to a new joint e-learning initiative between the British Franchise Association and Lloyds Bank. The Prospect Franchisee Certificate has been developed to provide anyone considering investing in a franchise with a comprehensive overview of what it takes to succeed.
The video-based course provides insights into everything from evaluating franchise opportunities and business management to financial understanding and legal considerations. Best of all, it’s free, so take a look at the programme by visiting http://bfa.trainme.tv/.
Anyone considering starting a franchise should be taking this course as an essential element of their research. It costs nothing, is jargon free and will help them with their commercial and financial awareness.
After the prospective franchisee has successfully completed the training programme and assessment tests after each video module, they can print out a certificate that can be provided to a franchisor to demonstrate they have attained a good knowledge of the sector, as well as business and financial planning. This will help their credibility as a serious candidate.
Involve Family and Friends
Once you have a basic awareness of the franchise market, involve your family and friends in helping you to make the ultimate investment decision about the franchise opportunities on your shortlist.
Running any new business will take a great deal of drive, energy and commitment, so expect there to be some impact on your personal life.
This may mean initially making sacrifices, like spending less time with your children or abandoning thoughts of an extended family holiday while you build your business.
It’s best to adopt a systematic approach to selecting the right franchise brand for you. Lloyds Bank provides a free guide of 30 key questions you should be asking a franchisor to help you make your decision. These questions can be downloaded from www.lloydsbank. com/franchising.
Many of these questions you would be asking naturally. However, it’s a great checklist to ensure you don’t miss anything.
Speak To Existing Franchisees
Research of any franchise opportunity must include speaking with as many existing franchisees in the network as possible. This insight is invaluable in helping you make your investment decision.
Don’t allow a franchisor to cherry pick who you talk to, as you should be free to speak with whichever franchisees you wish to. Often, new franchisees fail to get a good cross section of views from people already operating the business model before making their decision to commit to the brand.
Check the Legal Agreement
Once you’ve decided which franchise to invest in, it’s important to get the franchise legal agreement independently checked and explained to you before signing on the dotted line.
Lloyds Bank has partnered with an experienced solicitor who specialises in these contracts and can provide a detailed report on the legal agreement and obligations at a discounted rate before you’ve made a commitment to invest.
The Lloyds Bank franchise team offers more than just financing your franchise dream. Our extensive knowledge of the franchise market and the available investment opportunities will assist you in making an informed decision about your franchise options.
You don’t need to be a Lloyds Bank customer to benefit from our guidance and support.
10 Top Tips
- Understand whether franchising is right for you and gain invaluable sector knowledge by completing the Prospect Franchisee Certificate.
- Include your family and friends in the decision making process.
- Download the 30 key questions checklist from the Lloyds Bank franchising website.
- Take a methodical approach to selecting the right opportunity for you.
- Avoid fads and look for opportunities with longevity and growth potential.
- Investigate the industry sector and speak to relevant trade associations and governing bodies.
- Speak to as many existing franchisees as you can prior to making any decision.
- Carry out extensive local market research into your potential customers, competitors, pricing and territory demographics to ensure the business has potential to succeed in your chosen area.
- Get the franchise agreement checked and explained to you by an experienced and knowledgeable solicitor before signing it.
- Produce a detailed business plan, which should be used as a working document to identify development areas and potential opportunities as your business grows.