The Characteristics of a Good Franchise

The decision to start your own business is often both exciting and frightening in equal measure, irrespective of the circumstances that lead you to that decision, and although franchising has an excellent track record nothing must be taken for granted, so here are one or two ideas that should help you make the right choice.

Buying a franchise is an important decision that should only be taken after a lot of thought and consideration, and although that maybe stating the obvious, how should a prospective franchisee approach the task and what should they look for when making a final decision.

The number of franchise business models that are available today is mind boggling, from garden maintenance to fast food. There are franchises that operate from home, usually with a van where the franchisee provides the service or supplies the product direct to the customer. There are business format franchises that operate from trading estate premises such as fitting replacement hose pipes to industrial equipment, or high street premises offering printing services. A visit to the BFA’s website will provide a huge choice of successful franchise businesses that have been operating for many years and have been ‘vetted’ by the BFA, although there are other perfectly good franchises who may not have joined. So if choice is not a problem where does a new prospect start?

From my experience there are usually 3 factors that have a huge influence on identifying suitable franchise opportunities. First, (and often foremost) how much is available to comfortably invest in the new venture in relation to the start up costs and working capital needed during the first year. Secondly do I have the relevant experience or personal skills the franchisor is looking for and which are needed to successfully operate the franchise on a day to day basis, and thirdly can I see myself doing what is required day in day out for the next few years or longer to generate a good income. For example when I was involved with Prontaprint’s early expansion we did not look for printers as franchisees, or even people who had worked in a printing business, because Prontaprint’s success was based on achieving consistently high service levels, and we wanted franchisees that understood that concept and bought into the Prontaprint ethos.

Having prepared a list of potential franchise opportunities that are of interest and affordable how do you go about making the final choice? Here are some thoughts and suggestions to help you decide, however, the final choice of who to join is often subjective and influenced by such factors as available territory, or the management team you feel most comfortable with.

All good franchises are tried & tested, but the ‘younger’ the franchise network the greater the risk. Alternatively the established networks will have less choice of new territories available but there may be some existing established areas for sale.

The characteristics of a ‘good’ franchise start at the beginning with the enquiry and recruitment process, so is your enquiry dealt with politely and efficiently. Is the information you receive clear and informative, and it should explain the next steps you must take to progress your interest, usually complete and return the standard questionnaire to set up a meeting with the franchisor.

Given the importance of the decision you are considering the only way to really determine whether or not the business could suit you is to attend an initial meeting with the franchisor to find out everything you need to know about the business and the recruitment process that the franchisor uses. After the initial meeting you should understand exactly what your day to day role is and how you generate your income and the entire recruitment process should be explained (step by step). Depending on the franchise model you may be given additional information, facts and figures, to take away or asked to complete some local research for a further meeting. The significance of the recruitment process is that however it is completed you feel satisfied that you have everything you need from the franchisor to make a decision, and that decision is made entirely at your discretion without undue pressure from a third party. In other words you have chosen to ‘buy’ the franchise and not had it ‘sold’ to you.

Check out the support that is provided by the franchisor at start up (such as induction training and launching the franchise) and then the ongoing day to day support such as sales promotion and marketing, and speak to some existing franchisees. You should feel confident that the training will provide you with the knowledge (Know How) and skills needed to establish your franchise.

Ongoing support is an important topic to approach and a good franchisor should be relaxed about providing examples of current and previous sales promotion items. Franchisors should be equally relaxed about discussing their future plans for franchise development and how they intend to expand their network throughout the UK and often overseas.

The Franchise Agreement is a key document that must be read carefully and advice taken on, but in practise the Agreement is not usually negotiable. However, the franchisor should be prepared to explain the purpose of any clause that you need further clarification about. So long as you fully understand the ‘rules’ you can decide whether or not you want to join the ‘club’.

At some stage you are likely to be asked for a deposit as an indication of your commitment and to cover the franchisor for any additional work they have to complete with you such as finding suitable property or helping you prepare your business plan. Before asking for any financial commitment most franchisors will provide you with a copy of the Agreement, let you have sight of the Operating Manual, and allow you some contact with existing franchisees. You should be clear in your own mind that this is the franchise for you (and the franchisor should be equally sure of that) and you should have any final points relating to the franchise agreement agreed and if appropriate in writing and you have an area clearly defined if applicable. Finally you should understand what proportion of the deposit is at risk if for any reason you do not complete.

At some stage, usually just before or after a deposit is paid, you should be able to spend time (supervised) observing the day to day operation that you will be expected to be responsible for if you go ahead, which could be in a company owned business or a franchisees and that will give you an invaluable insight into the day to day operation, but please bear in mind that there are also genuine confidentiality issues connected to this point and each franchisor will have their own policy which they should be comfortable explaining to you.

A successful franchise often operates as a partnership of sorts with the franchisor developing the business model and the franchisee concentrating on providing the product or service in their local area, and when that combination is effective it can be extremely successful and rewarding to everyone involved.

Remember there are many good franchises available today and so long as you have the funds, and are totally comfortable with your day to day role you have greatly increased your chances of success. And a good franchisor will be honest if they believe you don’t have either the necessary funds or the ability, and reject you, but they are probably doing you a favour and if that happens you need to continue your search for a business model that does suit you, and there is certainly one out there.