Franchising is a means of starting and running your own business with a very high success rate: providing you choose a good franchise in the first place.
A good franchise will offer you a proven business format with the initial and continuing support that you will need. Your business will work under the brand established by your franchisor, using the business system they have developed and proven in the marketplace.
You will pay an initial fee to set up using the brand and the proven business format, and you will pay continuing fees for the support that will keep you in business earning profits on the trade that you do, and building a capital asset that you can re-sell.
There are a number of step by step systems in place to enable prospective franchisees to narrow down the large number of opportunities out there. Whilst there is no guaranteed fit to personal circumstances it is important that your search for the right franchise has some structure to it so that you are not just using your instincts.
A more detailed and defined approach to research can be found in the bfa book 'How to Evaluate a Franchise', as part of the bfa Franchisee Guide or by attending a bfa seminar.
bfa membership. Of the 759 franchisors operating in the UK 338 are members of the bfa. 61% of new franchisees make bfa membership a part of their criteria for assessing a franchise. Whilst it is not a guarantee of a system, it does ensure that the franchisor has been independently measured using established membership criteria against a code of ethical franchising.
Your finances. Understand right at the beginning what you can afford to invest and what borrowings you are prepared to take. Also pay attention to the returns that the business will generate for you. Do this before you fall in love with something that you cannot afford or that cannot support you or your family.
You. What are you good at doing, what do you want to do and what will your family life and personal circumstances prevent you from doing? If you cannot bear the public then consumer facing businesses may not suit. Equally if you take the kids out every weekend a business that requires weekend work is not the best fit. You don’t have to stay in the industry that you have worked for your whole life but you should be going into something where your experience as skill will benefit you.
Research the market. Speak to trade associations for the operational business. Use the internet to research the business that you will be involved in. Those entering franchising are sometimes blinded by owning their own business, they need to understand what that business actually does and the market in which it operates.
Research the franchise. Speak to current franchisees, of your choice. This may be managed and not every franchisee wants to speak to you, but don’t just settle for the ones you are given. Look for franchisees with a background like yours or ones at differing stages of development in different areas. Also research the franchisor. What is his/her background? How has the business grown? Have they lost any franchisees? Evaluate the support, the value in the costs and the nature of the agreement. They will all the while be assessing you to decide whether they want you.
Be sure. Take your time in this process not somebody else’s. Make sure that the short listed companies have been compared against a standard benchmark or measure and that you have been through in your research. During your due diligence you will need to take professional advice from banks, solicitors and accountants. Make sure that when you do they illustrate understanding in franchising with bfa Affiliate membership. The most important aspect is if you are unsure then you haven’t researched enough and with a decision for 5 or 10 years of a franchise agreement you will have plenty of time to reflect on a mistake. So try not to make one.
Why buy a franchise from a bfa Member?
Whilst checks by the bfa are not a substitute for a prospective franchisee’s own checks on both the franchised network and the individual business proposition, buying a franchise from a bfa member gives the following benefits for prospective franchisees:
• Identification of companies offering an ethical business format franchise.
• Commitment on the part of franchisors to act ethically and keep up with best practice.
• Advice and guidance on how to choose a franchise.
• Access to accredited professional advisors.
• Added value to your prospective franchised businesses.
• Access to low cost complaints and arbitration schemes should a dispute arise.
• Protection from unwarranted legislation in the UK and Europe.
• Exclusive access to the prestigious Franchisee Award Scheme sponsored by the HSBC and the Daily Express.
Where to Now?
There are many other sources of information about franchising. Perhaps the next step would be to visit a franchise exhibition (see the Diary Page for dates, or attend one of the bfa’s franchising seminars. These are a very time and cost effective means of meeting the experts and also of talking with people who are already franchisees.
You might also want to consider getting a copy of the British Franchise Association Franchisee Information Pack which can be ordered on-line from the bfa Bookshop. Twenty five years of experience have gone into this guide to equip you with all the tools to evaluate any franchise opportunity. The Guide comes with the DVD 'Your Introduction to Franchising' at no extra charge. You should also spend time searching through the bfa members (the search box is at the top of every page of the website) to understand the breadth of opportunity that is presented by the franchise sector.