The top priorities for any prospective franchisee who has found a brand or brands they are interested in potentially joining are to make sure the franchise say what it says it is and that the opportunity will deliver what you are looking for.
You’ll receive all sorts of sexy marketing collateral and promises when you’re speaking with a franchise about investing, as it’s the company’s job to make the business opportunity attractive to you. It’s your job, above all else, to retain a cool head, steady hand and clarity of mind.
Ultimately, you’re looking to find out that what you’re being told is mirrored in reality.
How exactly can you do that? With the mantra of ‘research, research, research’ running through everything you do in your due diligence, here are 10 key areas to focus on:
• USE THE BRITISH FRANCHISE ASSOCIATION
The bfa accredits franchise opportunities using a stringent set of criteria based on their systems, franchisee support, disclosure of information and the European Code of Ethics for Franchising. It is the not-for-profit trade association for UK franchising that exists to help people in exactly your position with objective, unbiased information. Visit the bfa’s website (www.thebfa.org) for advice, tips and 50 questions to ask a franchisor, as well as a list of all accredited member franchisors and advisers.
• WORK OUT WHAT YOU CAN AFFORD
Levels of investment vary greatly. It’s important to find out what the total start-up fee typically is, not just the franchise fee. Assess and understand, from the beginning of your process, what you can afford to invest and how much you are prepared to borrow from a bank or family - and remember to consider working capital.
• SPEAK TO EXISTING FRANCHISEES IN THE NETWORK
You want an extensive list to choose from, not just a few the franchisor provides you with. Speak to both successful and any less successful franchisees to give you a rounded view of the business. Existing franchisees can tell you what the franchisor’s support is like, if the turnover/profit projections are realistic and many other things from the coalface of the business. Essentially, check that what you’re being told is reflected in their experiences.
• UNDERSTAND THE BUSINESS
Make sure you understand all the business operations and what you’ll be doing on a daily basis, as well as the lifestyle it will give you. You may choose a field you’re experienced in or one you’re passionate about, but think carefully about what you want to do.
• CONSIDER THE TRAINING
Be sure that the training provided, both initially to get you up and running and on an ongoing basis to help your business grow, is sufficient for you to be able to gain the skills required to operate the business successfully.
• CONSIDER ONGOING FEES
Franchisors charge a management service (royalty) fee, which will usually be collected either as a percentage of monthly turnover or through the supply of the raw materials you need to operate. Make sure you understand the structure and level of fees and what you get in return. These fees fund the ongoing support you receive and the future development of the business.
• TALK TO HEAD OFFICE STAFF
Don’t underestimate the importance of meeting the people involved at head office, finding out who you would be in contact with and what their experience is.
• GET THE FRANCHISE AGREEMENT CHECKED BY A FRANCHISE LAWYER
You’re about to sign a legally binding contract, usually for five years at a time. Getting it reviewed in order to know exactly what you’re signing up for is essential. Franchise lawyers can be found on the bfa website.
• SELECTION PROCESS
If the franchisor doesn’t appear selective about who it recruits, walk away. You want to see it is stringent in its process, not just letting anyone and everyone join the network whose brand you will be trading under. Investing in a franchise should be a two-way recruitment process.
• TAKE YOUR TIME
Make sure you assess and reassess everything as part of your research before you fall in love with a concept and dream - and remember the ‘too good to be true’ adage. You’re parting with your hard earned money and making a commitment for several years, so it’s essential to be certain rather than making an expensive mistake. A good franchisor won’t pressure you into a decision, as it will understand the level of undertaking required and want serious people to join its franchise UK network. If you feel rushed, walk away.
