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If you decide to go down the Franchise route – just a few
things to confirm before you sign on that dotted line.
•Always research the market thoroughly – read the franchise
trade press, check out the numerous internet sites and sign up to
industry newsletters. Make sure the Franchisor is registered with
the British Franchise Association (BFA).
•Do you know anyone who is currently running a franchise
business? If so, ask them what the pros and cons are and ask the
franchisor for a list of current franchisees to speak to. If they
are reluctant to let you contact them freely, be suspicious.
•Do the financials stack up? Always check the projections with
your own research into your local market. Variables such as
location, disposable income, product and buying trends can all
affect your projections. If the projected revenues look too good to
be true, they probably are!
•Bear in mind your initial start-up costs will need to be
deducted from your revenues. Don’t leave yourself short; you may
need to have enough working capital for 6-12 months until your
business becomes more established.
•Ensure that you have taken into account all fees that may be
charged by the franchisor, and what these fees include. It is also
important to check whether there are any other ongoing fees such as
training, the purchase or upgrade of equipment, commitment to a
minimum advertising expenditure on a monthly/annual basis etc.
Finally, find out if there are any other costs required to start
the franchise – i.e. legal fees, rent deposits, telecoms, or
vehicle costs. Your franchisor should be able to give you a
breakdown of what the fees include and the types of costs you can
expect.
•Consider whether you have the skills and the right attitude
to take on a franchise. Franchising is hard work and needs energy,
commitment and stamina. Many people believe that you pay the
franchising fee sit back and the money will flood in but this is
not the case.
•Do you have contingency funds available? When running a
franchise you may experience good times and bad times due to
factors such as seasonal fluctuations, slow payers etc. Like most
businesses it is wise to have either cash reserves or a line of
credit to see you through any challenging times.
•Consider alternatives. Franchising is a great way to start a
business but it does not suit everyone.
•Are you disciplined enough to be able to follow someone
else’s business method or are you too much of a “free spirit” to be
bound by a plan or ideal that is not your own. The amount of
control varies from franchise to franchise. Some are very hands-on
while others leave the franchisee to ask for help when they need
it. Try to find out what sort of culture your potential franchisor
has and see if it’s a good fit.
•Do you have an exit strategy? When setting out on the
franchise route ask yourself what your long-term goals are. Do you
hope to eventually sell your business or pass it on to a member of
the family? If so it is worth checking out which types of franchise
have the best resale value.
•Have you set realistic goals for the franchise? Run properly,
a franchise can be a very profitable venture. It would be nice, but
franchising is unlikely to make you a millionaire overnight, so set
yourself steady targets which can be achieved.
•It is always essential to keep in mind that, as with any
business venture, the more effort you put into a franchise the more
successful it is likely to be.
If you would like more information from Nwes please email =
hannah@franchiseexpo.co.uk
(Written by Anita Edwards, Nwes Business Advisor.)
