On average, between 40,000 and 50,000 new companies are
incorporated each month but here’s the shocking news, between
30,000 and 40,000 companies are also dissolved each month. That’s
up to 80% of businesses failing and normally before they reach five
years old. It’s no wonder that many people turn to franchising to
be their own boss and here’s why…
•Turning UK business failure rates on their head, less than
20% of franchises fail in their first 5 years
•No need to spend large sums of money on brand and product
development – it’s all been done for you
•Take your existing skills and build on them with training
from your franchisor
Transworld Business Advisors have been working in the world of
buying and selling businesses for over 30 years and here are their
9 crucial steps to buying a franchise.
In order to find the right franchise for you, you need to ask
yourself lots of questions. Why are you interested in buying a
franchise? What makes the most sense given your background and
experience? Where do you want to be in 10 years’ time? It’s a good
idea to spend some time with a third party who can challenge you
more than you can yourself.
2. Research your
There is a vast number of franchise opportunities out there
and creating a shortlist of brands can be a time-consuming process.
Things you need to find out include whether your local territory is
available, will typical turnover figures support your lifestyle,
and if it sounds like something you would enjoy to do every day in
the long term.
3. Present and
Once you have created your customised list of franchises, you
need to present them in a way that you can easily compare them.
Understanding why each of them could be the right match for you,
the brand’s position in their marketplace and what information you
are missing that you really need to know.
4. Time to get in
If you have prepared well in steps 1 to 3 then you will now
have a great idea of what you want to ask the franchisors of your
shortlisted brands. However, don’t forget that they’ll also have a
lot of questions for you – the partnership needs to be win-win! Be
prepared to spend at least 45 minutes on each initial exploratory
call or they may ask for a face-to-face meeting.
After speaking with the various franchises, you will typically
receive a Financial Information Memorandum (FIM) in electronic or
paper copy for your review. This document typically contains 23
items with essential information for you to make an informed
business decision. This is another good time to speak to that third
party to help you review the information and it is normally at this
point that you will take your shortlist to just one final
After reviewing the FIM, it’s time to start enquiring and
validating the information with current franchisees. This is such
an important step and the franchisor should offer you free reign to
contact anyone within the network, not just a few hand-picked
names. From our experience, it’s worth asking to speak to
franchisees whose financial performance range from weak to
At this time, you may still have questions regarding the
franchise you have chosen and these can often be around the more
detailed financial aspects or development strategies of the
business. A call with the franchisor will normally have been
offered as part of the recruitment process and keeping the lines of
communication open is a good sign of how they will support you
should you become a franchisee.
Many franchisors offer a discovery meeting or event where you
can meet the franchise support team, other franchisees and see a
franchise operation up close. This can be offered at an early stage
or once you have had time to review the FDD but we always recommend
After the previous 8 steps, it’s time to make a decision. This
will either be to sign the franchise agreement or to keep
searching, going through process again. Interestingly, it takes
most franchise buyers around 3-6 months to complete these 9 steps
and at Transworld Business Advisors, we have a service that leads
you through this 9-step process so you are not alone.
You can receive a full information pack on support in
your franchise search by contacting Transworld’s
- Click here