Accessing the Franchisor

A good franchise should have at least the following attributes:

1.         A proven business history

Ensure the franchisor has been successfully trading for at least two years.

Ask to see evidence of their trading history and their annual accounts and meet with other franchisees and get their opinion of the success of the franchisor.

10 key questions for franchisees

Are you making money?                                                         

Are you working long hours?

Do you get on with the other franchisees?

Has the business affected your family life?

Does the franchisor offer good support?

Are you lonely?

Do you enjoy the business?

Is the business giving you what you expected when you first came on board?

Is your family still supportive?

If you knew what you know now would you still have joined the franchise?

2.         Well documented systems

The franchisor should have their business system documented by way of a manual (or manuals).

Ask to see the manual(s) before you sign the Franchise Agreement and be comfortable that the systems are well thought out, professionally presented and easy for you to understand and follow.

3.         Effective training

The franchisor should provide you with training in all aspects of the business system – including but not limited to sales, marketing, operations and finance.

Ask to see a copy of the training programme for new franchisees.

4.         Security of tenure

Make sure that the franchisor does actually own the franchise or at least has the rights to operate the franchise.  It is not unusual for a franchisor to run the business under a Master Licence agreement from another country.

5.         Ongoing support structure

Ongoing support is critical and whilst it is true that you are buying into a brand and a business system even more you are buying into the franchisors intellect, know-how and support.

You need to be clear that they have this support structure in place.

6.         bfa membership

The British Franchise Association under-go vigorous checks on franchisors before allowing them to become members.

It is not to say that non-members are poor franchisors but bfa membership does give you added ‘peace of mind’.

You can answer a number of questions about a franchisor by doing diligent ‘desk research’.

Check with the bfa, Companies House, franchise magazines, and ask the following:

·         Are there other franchisors in the industry? If not, why not?

·         Is your preferred franchisor the largest operator? A key player?

·         Are they an insignificant newcomer but with a brilliant new slant?

·         Does it offer the best package to you as a customer?

·         How often does a consumer buy the product or service?

·         Do the products or services enjoy repeat business?

·         What is the typical value of a sale – and the typical profit?  How many customers would you need to meet your minimum business projections?

·         Does this franchisor seem profitable?

·         Does this franchisor offer the best potential for growth?

However, there is nothing better than meeting with the franchisor face to face and asking about:

·         Profitability – ask for two/three years of reports and accounts.

·         Knowledge – question them on the market and market trends.

·         Success – how long have then been in business/how successfully?

·         Vision – are they a serious player – or full of platitudes?

·         Support – ask to see detailed support plans; examine the company organisation chart; note improvements made to their systems (or not); are you forced to buy company product?  Do they have the manpower and intellect in each key business area?

Also get a copy of the franchise agreement – they won’t change the document to suit you but you need to be aware of its contents.

Once you have met with the franchisor and if you are still happy to proceed (and they are happy to meet with you then ask to visit/speak with some existing franchisees.

So, in summary, look for a franchise where the franchisor has a proven history, good systems, effective training and bfa membership; that they all are a business you think you may be interested in; that you have some or most of the skills required; the investment required is within your compass; and the industry meets your specification in that it’s large, growing and sustainable.