Choosing a Franchise – Top Tips

With the thousands of franchise opportunities available it can be a daunting task to decide which one is for you.  

Adapted from CivvyStreet Magazine, September 2013. Words: Suzie McCafferty, Managing Director, Platinum Wave

This article aims to offer some practical advice based on my 14 years experience of running successful franchise networks as well as helping other businesses to franchise and recruit franchisees. Here are 12 steps to consider:

1 Are you suited to being your own boss?

Although you should receive excellent training and support from any reputable franchisor at the end of the day the development of the business in your franchise territory is your responsibility. It will require hard work; dedication and you will have to make sacrifices. Can you follow a system? – franchisors do not like mavericks! It is fine to use your initiative but the franchisor has already developed a business system, which is proven to be successful and profitable – there is no point trying to reinvent the wheel.

2 What type of franchise would suit you?

Is there an interest or hobby you are passionate about? Why not try and find a franchise that could incorporate it? Do you like an outdoor or office working environment or would you prefer a van or home-based franchise? Do you want to work in the franchise or would you prefer to employ and manage others to run the franchise once it is up and running? Do you want to work full-time or part-time? – There are numerous part-time franchise opportunities available depending on the return you would like to make

3 Make sure you have the financial resources available to succeed in the franchise.

Apart from the initial franchise fee you will need sufficient funds for working capital especially in the early stages. Remember that there may be some time before the franchise starts to generate profits so you must have sufficient contingency funds available for day-to-day living and business operating expenses. The good news is that you may not have to find the entire amount of the franchise fee yourself. The banks still look very favourably on ethical franchising businesses and most are willing to lend up to 70% of the franchise fee – contact your bank’s specialist franchise division for advice.

4 Ensure you have the support of your family.

A franchise is no ‘easy option’ and requires hard work and often long hours to get your business established. Choose a franchise that will provide you with the work/life balance you are looking for.

5 What sector or industry do you want to work in?

Franchise opportunities exist in every field from fast food, retail, accountancy and childcare to name a few. Most franchisors will give you extensive training and coaching in their specialty and many prefer to start with a ‘blank canvas’ in terms of your experience. However, if you have a specialist skill or experience that you can use in the franchise that is a bonus.

6 Do your research.

Attend franchise exhibitions, read all you can in the trade press/websites and make sure you visit the British Franchise Association (bfa) website (www.thebfa.org) which has a wealth of information, help and advice. The bfa also runs regular seminars throughout the country offering an insight into franchising. Once you have shortlisted your franchise opportunities attend a Discovery Day if possible to have more in-depth discussions and learn more about the franchisor. Ask to speak with any of the existing franchisees and ask about their experiences – good and bad! Carry out due diligence – check with Companies House that the financial performance of the franchisor is as claimed.

7 Franchisors frequently offer an exclusive territory to franchisees.

What is the best location for your franchise? – Look at the demographics and likely market demand for the product or service in the area, is there enough potential there? Is the business seasonal? – Ask what happens during the quiet periods.

8 Ask yourself if you want a brand new franchise or to invest in a ‘going concern’ resale opportunity.

Buying an existing franchise has many benefits such as an immediate income stream and existing customer base but obviously you will need to pay a premium for this. There are numerous brokers and websites specialising in selling existing franchises but as always, take professional advice from an experienced independent franchise lawyer or accountant before you commit to purchase.

9 Think about how the franchise will expand in future.

Do you have a growth plan? Will you want to take on additional franchises and territories? You will want to exit the business at some stage – how will you prepare for the sale and what profit do you expect to achieve?

10 Do you meet the franchisor requirements?

The franchise agreement can be quite detailed and complex so you need to ensure you can meet all the criteria. For example, any franchise that involves work with children and young people will require a satisfactory CRB check. It is best that you consult a specialist franchise lawyer to guide you through the process. However, please note that franchisors will very rarely if ever amend their franchise agreement.

11 Do you have business acumen?

Many people have successfully made the transition from the Armed services and public sector into the franchising world so commercial business experience is not absolutely essential. Nonetheless, franchises are commercial enterprises whose aim is to make profit. Also, all franchises involve some element of selling your product or service – if you are not comfortable with this find someone who can do it on your behalf.

12 Do not feel pressured to take on a franchise.

It is a major decision, which will affect you and your family so it is important that you take time to do thorough research into the opportunities which are available as well as due diligence on the franchisor. Most franchise agreements are a minimum of five years so you must feel comfortable with the people you are going to work with. It needs to be a ‘win-win’ for both parties. It is in the franchisor’s interest for you to succeed as the more successful you are the more profitable they will be. Like any business relationship you must like the people you are working with but with a franchise it is going to be even more important with a higher level of commitment. If you feel you are getting the ‘hard sell’ from a franchisor be very wary – do not proceed if you have any doubts.

Lastly, during my 14 years in the franchise sector I have seen many people make the transition from the Armed services to run successful and fulfilling businesses through franchising … Good luck on your journey!

About Platinum Wave

Platinum Wave is an independent BFA accredited franchise consultancy. Suzie McCafferty is regarded as one of the UK’s foremost franchising experts having worked in the sector for over 14 years having successfully built her own international franchising networks and establishing multi-million pound companies through franchising in the UK, Europe, the Middle East and even the Caribbean. Suzie now specialises in helping other businesses to grow and develop their businesses through successful and sustainable franchising and franchisee recruitment on an international scale.

As a finalist in Young Entrepreneur of the Year Awards 2006 and 2011, Suzie is an affiliate member of the British Franchise Association and was Chairperson for the Scottish Franchise Forum, part of the British Franchise Association, in 2009 and 2010.

For further information please visit: www.platinumwave.co.uk, email suzie@platinumwave.co.uk or tel: +44(0) 131 664 1218 or +44(0) 7793 054 233.