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How can I check the track record of a franchise business?
There are a number of things you can consider doing to check the track record of a franchise business. These include:
• Obtaining financial information. If the franchisor is a company registered at Companies House, its latest accounts may be available. However, if the franchisor is a new company (and has not yet filed any accounts), or is not a registered company, you should ask it to provide further information regarding its financial position.
•Asking for pilot information. If the franchise business is relatively new, you could ask the franchisor if it has conducted a pilot scheme and obtain the results, including any trading information and figures.
• Asking other franchisees. Existing franchisees will be a good source of information, as they will have first-hand experience of how profitable the franchise is, how it grows, and how well the franchisor supports its franchisees and looks to improve the business format. It is always a good idea to seek out existing franchisees yourself, rather than just speaking to franchisees that the franchisor may suggest, as these are likely to be hand-picked to give a positive view of the franchise business.
• British Franchise Association membership. In addition to having been assessed against certain other criteria required to gain associate membership, full members of the bfa will be accredited as having a proven trading and franchising record.
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