Chris Gillam of Mail Boxes Etc explains the pros and cons of franchising, and how to ensure you invest in the right business
There’s plenty to think about if you are considering buying a franchise. As you start your research, you will soon discover a vast amount of advice on the topic across a wide range of media. There are hints and tips on pitfalls to avoid and how to be successful, but there is no definitive or universal formula for success that suits everyone, since the choice of which way to go and what to do is dictated largely by personal preferences and ambitions.
Weighing up the pros and cons of becoming a franchisee is an essential part of the process. There are many well known benefits, including being your own boss, comprehensive training, determining your own destiny, reaping the rewards of your own hard work, the potential to provide your family with a better standard of living, reliable advice and back-up from the franchisor.
Against that, you must be sure you are suitable for self-employment and ready to shoulder the responsibility for your own business. You must expect to work hard and you will be required to follow the franchisor’s proven system without deviation.
While opinions on how to become a ‘good’ franchisee vary between franchise professionals, for me the single most important thing is to be sure you want to be part of the franchise that tops your wish list. It is crucial to join a business you feel passionate about, as you will enjoy the work it entails and also believe it justifies the major personal and financial commitment you are about to make, not least because it will be binding and totally absorbing for some years. If you believe passionately in what you are doing, your enthusiasm and energy will instill confidence in others too.
Start your quest for your ideal franchise by looking critically at yourself and analysing the kind of person you are. You must be honest and realistic about your own ability to run a business, manage staff and engage customers. Remember that, ultimately, you are the only person who truly knows if the franchise will be suitable for you or not and whether it will offer the opportunity to realise your personal goals.
Your personal circumstances are important and you must be sure that, if you have a spouse or partner, they are in total agreement with you, whether or not they plan to be actively involved in the business. A sceptical or dissenting ‘other half’ can have a serious and detrimental effect on a new and inexperienced franchisee and can influence how well the business performs.
Think about what you do and don’t like doing; your existing skills, training, qualifications and experience, which should be used to their full potential; and whether you want to make a complete lifestyle change or stick with what you already know and feel comfortable with. For example, running a sales-based franchise that requires being out and about meeting people could be difficult for someone who is really shy. Similarly, an extrovert would find it hard having a desk job in a closed office with no outside contact.
Consider if you are suitable for selfemployment and the responsibility it brings. Could you cope with being on your own and being self reliant for long periods or do you need the buzz of colleagues to keep you going in work mode? Being your own boss is rewarding and offers freedom and flexibility, but it can also be lonely and frustrating, especially in the early days when you are the only person around to do everything.
Meet the team
After your initial general research, find out as much as you can about your chosen franchise, then meet senior management at the franchise’s head office. This is an opportunity to ask the franchisor questions, as well as to answer theirs, and is a great chance to see how well you get on with each other. Since franchising is often compared to marriage, it is important the chemistry gels at the outset between the two parties.
Arrange to meet franchisees in the network, preferably a varied cross section at different stages of development. You are sure to receive honest and useful advice from hands-on franchisees and their staff.
When considering a specific franchise, be realistic about how much you can afford to invest and ensure you understand the franchisor’s financial projections and the franchise agreement. It is vital you take specialist professional advice on both, consulting the British Franchise Association’s list of experienced franchising affiliates before engaging any adviser.
Huge choice offers something for everyone
There has never been a greater choice of franchises in the UK, and it’s growing all the time as new businesses expand via franchising. There is a wide range of different sectors, investment levels and types of operation, from van and home-based to retail, industrial and office-based premises.
Franchising appears to have weathered the UK’s recent financial ups and downs very well and continues to grow, both through attracting new businesses to the format and the expansion of existing franchise systems. You can be reasonably confident about the state of the industry, which has grown continuously year on year, backed by committed franchisors and franchisees.
It now contributes some £13.4 billion to the UK economy. At a time when unemployment grew by 180,000, franchising created a total of 73,000 new jobs last year. Today there are 929 different franchised networks operating across a wide range of different sectors and industries that include everything from fast food to children’s music classes and from car repairs to printing.
The strength of franchising
Be reassured by those companies who belong to the bfa, whose endorsement is often likened to the BSI Kitemark. The bfa embraces only those franchises that adhere to its strict code of conduct and operate by its ethical guidelines. Franchises undergo a rigorous investigation before they are allowed to join the bfa to ensure the high standards of the industry are maintained.
My last piece of advice is to take your time in deciding what you want to do and which franchise you want to join. Don’t be hurried along by an overly keen franchisor. Follow your instinct to be cautious - if you suspect the overall ‘deal’ seems too good to be true, it probably is.
YOU’RE NOT BUYING A JOB
Buying a franchise is not the same as buying a job. Setting up a new franchise is just like establishing any other start-up business, but one where you are following an established template. It requires dedication, hard work and, at least in the early days, some long hours. During the formative period it is likely that you will have to be flexible about your working day and will sometimes have to stay late to meet tight deadlines.
If you’ve always wanted to have your own business, then buying a franchise is a fantastic opportunity to realise your long-held ambition, with the benefits and advantages of a proven formula and other people training and guiding you along the way. Perhaps you have long wanted to get out of your comfortable rut of employment, but were cautious about taking the next step, until circumstances such as redundancy forced you to look at a new alternative - franchising could be the golden chance to make that change.