A simple checklist for peace of mind.

It doesn’t matter what business you are investing in – be it an independent or a franchise there is always some risk involved.

In franchising the risk of failure is demonstrably less than an independent and franchising is, theoretically at least, the perfect business ‘partnership’ – it offers substantial benefits to all parties and caters for individuals who both want to work for themselves AND create personal wealth which is directly related to the effort they are ready to invest in.

A good franchise is a ‘marriage’ with the franchisee contributing ambition, drive, energy, commitment and their own skill set and the franchisor offering experience, know-how, proven operation methods, marketing tools, sales training, technical guidance as well as a corporate identity, trademarks and the all-important brand.

Because there is this extensive support structure available franchisees come from a wide range of backgrounds and experience, and running a franchise is conducive to a variety of transferable skills, including project management, marketing, operations and sales, and the franchisor is there to help if you need to boost any skill sets.

It is this marriage of the skills, work ethic and ambition of the franchisee with the system, tools and structure of the franchisor that makes franchising the success it is – an industry worth over £17 billion and employing more people than the combined UK armed forces!

However, as we know death and taxes are the only two things in life that’s guaranteed and whilst all the research indicates that a franchise is significantly less risky than an individual start-up business nevertheless there are failures in franchising and there are risks.

I have been involved with franchising for some 30 years now and my advice when looking at buying into a franchise is:

do your homework.
don’t rush.
don’t under invest.
choose something you are interested in!!

Like most things in life, the better the preparation the better the result.

Common sense dictates that you must not over borrow – make sure you can actually afford the franchise and if not then move on.

Research the industry – is it big enough, is it growing, does it appear to have longevity?

Can you see yourself in the business?

This is critical. A franchise is not a job, you can’t walk away at 5:00pm and you will be responsible for EVERY ASPECT of the business, so you had better want to be in that industry!

When you’ve worked out what you can afford, and you’ve done your homework and you’ve found a franchise (or more than one) which feels like a ‘good fit’ for your personality and your ambition then use the following ten steps / questions to help you to dig deeper and to help you more closely evaluate the Franchisor.

There is no sequence.

Is the franchisor a member of the bfa? If so, they will have undergone rigorous checks.
Have they been in business for several years? Longevity is a good sign of stability
What level of support does the Franchisor offer? Do they cover sales, marketing, finance, business planning, procurement and operations – the key aspects of any business?
Do they employ ‘real’ people and not just offer support via the telephone or online.
I’m a big supporter of businesses that have ‘multiple income streams’ – does this business offer more than one way of generating revenue?
How does the Franchisor make their money – if it is through on-going royalties based on performance where the Franchisor has an investment in helping you to grow the business; if they get most of their income from simply recruiting and ‘churning’ franchisees then you might want to think again.
Does the Franchisor have a reputation for investing in the system, for updating the system, for introducing new products/services?

Think of your agreement with the franchisor as a ‘lease’ and with a lease you expect regular updates and augmentations to the product, service, system.

Ask the franchisor for access to their last 3 years accounts (to check financial stability).
Read the Operations Manual whilst in the building (to evaluate the strength and breadth of system support) – the Franchisor will not let you take it off-site.
Ask to speak to a selection of existing franchisees.

I hope the above helps you in your process of evaluating the right franchise for you.