1. Take a good overview at your strengths and weaknesses – are you sure you have the capacity, temperament and skills to run your own business? Marketing and selling skills are becoming more important in running a franchise. When you run your own franchise business you need to think carefully about how you manage your time. Can you prioritise well and focus on activity that will drive your business forward?
2. Make sure you have the full support of your family – the additional responsibilities and demands on your time will inevitably cause some strain. Although we are always optimistic in business there are times where it can be tough. At these times it is vital to have the unity of those closest to you.
3. Choose some existing franchisees to talk to – ask how their business is performing and what support and service is being provided by the franchisor. Are the franchisees happy? What do they like and dislike about running the franchise?
4. For new franchisors, check they have run a pilot, how long did it operate, is it still trading and what has it achieved in financial terms? If no pilot was operated how does the franchisor know the franchise and therefore will you be successful? Taking on a franchise reduces risk in business as the system is tried and tested. Make sure that you are happy with the proven track record available for you to inspect.
5. Examine how well known the franchise and its service/product are. If it is a new franchise brand you can ask what customer surveys they have carried out. It is always good to see customer comments on a service. In business the customer is king so their comments really matter. A good reputation is a head start in business.
6. Look at the market as a whole – find out who your competitors are and how strong their position is. What is unique about the franchise proposition? If the brand is not well known you need to see what you can take to market as their franchisee.
7. Examine costs closely, in particular the franchise fee and monthly management fee, and whether they are reasonable and value for money; will the margins be sufficient to support the business after payment of regular fees to the franchisor? As a guide, the average franchise fee is £20,000, although this is skewed in view of a small percentage of higher figures. Ongoing fees average 11.4%.
8. Is the training provided by the franchisor sufficient to enable you to run the business successfully? The training should outline everything you need to know about the business and how to build it day by day.
9. Seek professional advice from an accountant about income and profit projections and from an accountant about income projections and from a solicitor about the legal agreement. Both should have a good understanding of franchising and preferably be affiliated to the British Franchise Association.
10. Talk to the Franchise sections of the main lending banks about the financial aspects of running a franchise and ask them to put you in touch with your nearest area franchise manager. You should also contact the British Franchise Association.
10 things to discover before buying your franchise - To learn more about this author, visit Nick Strong's Website.
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