Getting into franchising can be difficult and confusing. It should neither be rushed nor done on the spur of the moment.
Over the years, I’ve found a six-step process helps potential franchisees ensure an opportunity suits their needs and circumstances before they sign up:
1. Assess the suitability of the franchisor
Conduct a thorough and objective assessment of franchise businesses that capture your attention before making any commitment. Do they have a proven business history, are there documented systems in place and will they explain them to you in advance?
You need to be sure that the franchisor will provide effective training and most importantly have a reputation for robust and structured ongoing support. Finally, I would always be looking for bfa membership, a sign of accreditation.
2. Determine the investment
Taking on a franchise is an investment, not a job! So, work out what you need to invest. How much can you can raise yourself? What you might need to borrow? And don’t neglect to align these figures with how much you are likely to make in the short and long term.
It’s important not to over-extend yourself, be sure that you will be able to make any repayments through the business.
3. Check out the industry
Once you’re satisfied with the investment level and franchisor integrity, evaluate the wider industry.
Be confident it’s a good market to get into, that demand for the product or service can be sustained and that the industry is growing.
If your franchisor is not a key industry player, or is new to the sector, check out the competition. Also look beyond the immediate industry to be sure that other sectors don’t offer products or services which might monopolise market share.
4. Compare franchisors
During your research, it’s a good idea to shortlist more than one franchisor, either in the same industry or from an entirely different sector.
Compare and contrast key elements of their business model and offering. Look at their history, systems, training provision and membership of relevant industry bodies.
Then look at your own skills, experience and investment capability to see which might be the best match.
Finally, don’t forget to consider the growth potential and sustainability of the industries they operate in.
The franchisor should be able to provide much of this information. Set out a list of key questions you want to address and run through them together.
Make sure you ask to speak with existing franchisees too, and go through a similar process with them. Ask if they’re profitable, how many hours they work and if they value the franchisor support.
If the franchisor denies access to franchisees WALK AWAY.
5. Seek professional advice.
Once you’ve spoken to franchisors and franchisees, you will narrow your choice down to a couple of opportunities. Before you go any further, enlist a specialist franchise lawyer to look through the Franchise Agreement. Also speak to the bank about loans and other arrangements and find a good accountant to help you develop a business plan.
6. Make a decision
Now it’s crunch time. But before you make a final decision, revisit some important questions:
- Do your strengths match the success criteria?
- Will your weaknesses be addressed by franchisor training or support?
- Can you see yourself enjoying the business?
- You’ve done the numbers, but can you really afford the business, is it a good investment and will ongoing rewards meet your expectations?
- Do you think you can take the pressure? This won’t be a 9-5 job and you’ll need to work hard.
- Finally, do you have confidence in your franchisor’s experience, knowledge and support?
If you can answer Yes to all the above, then welcome to the world of franchising!