Considering a Franchise for a finger licking good business?
A lot of people consider this question, and why not? Instant access to an established business model, a recognised brand and a tried and tested system to ensure you stand the best chance of achieving the financial returns you’ve been told about (but aren’t allowed to rely on).
All you need to do is pay a large upfront fee and undergo a short training course and you’re all set. Still considering a franchise? Read on to be sure……
I’m doing franchises a disservice here; there are a lot of highly effective, highly developed and highly successful franchises out there – McDonalds, KFC, Subway, Hertz, Starbucks all come to mind. Franchisees gain access to a tried and tested system of blinding accuracy, instructions even down to the number of pickles on a burger. Franchisors can assist with sourcing premises, provide preferred suppliers list and take the guesswork out of everything. The initial outlay is high but the returns can be massive. However, some franchises aren’t so established. So what steps do you need to take when considering a franchise?
- What do you want to do?
Sounds obvious but you need to think about what type of work you want to do because you’re going to have to work hard. Really hard. To make a franchise successful takes a lot of graft and particularly in the early days you might need to be more hands on than you ideally want to be. So, if food prep turns your stomach, or you don’t like other people’s children, avoid a franchise involving those things. Think about your skills and what you like and look for something to fit.
- Research, research, research
Find out everything you can about the franchisor. Look at their accounts, look in the news, at social media. Do their claims stack up? Are there other existing franchises for sale? Can you find other franchisees (not the ones the franchisor tells you to speak to) and talk to them about their experience with this franchisor? Are they a member of any associations? Don’t rely on the information the franchisor gives you, find it out for yourself.
- How much can you afford to invest?
With the best will in the world, £10,000 isn’t going to get you a McDonalds franchise. Think about affordability. How much do you have to find upfront, what are the ongoing payments? Some larger franchisors provide loan finance to franchisees but check the terms. Think about what savings you have and how long you can survive on a minimal income whilst you get established.
- What are you actually getting?
By this I mean what will the franchisor do to support you? What territory will you get and is that wide enough to build a business with the returns you need? Will the franchisor do any centralised marketing, or will it be left to you to build your customer list. Some franchisors provide lots of resources, others not so much. Consider what you need to make the business successful.
- Read the small print
Obviously, I would say this, but in the rush of excitement around a new project, don’t forget to get some proper advice. Make sure you have an expert look over the agreement so you know exactly what is expected of you, what the franchisor will do and, perhaps most importantly what happens if things don’t go to plan. Exit and termination provisions can be particularly harsh on a franchisee so make sure you know exactly what the franchisor can do if the business is slow to develop.
If the franchise option still appeals more than starting from scratch, I can help. Clear and practical advice on your franchise agreement and associated documents, in plain and practical terms based on our experiences of working both for franchisees and franchisors. Email me at firstname.lastname@example.org to arrange an initial chat.