Franchising: Why it takes two to make business go right
Starting a franchise could be the business opportunity for you, but you need to find the right brand first. bfa CEO Pip Wilkins shares crucial advice...
Whether you’re only starting to consider franchising or think you have just about reached a decision, it’s important to realise you are not the only one that will be partaking in a due diligence process.
Just like any partnership where invested parties usually share a common goal for the business, franchising is no different.
As much as you will be trying to navigate the many opportunities on offer, franchisors will be assessing the many potential franchise partners to ensure they are right for their network. When the combination is right it can make for a powerful mix.
A franchisor with a proven business format franchise model has already felt the pains of marketplace stress testing so you don’t have to. They will have support for you from the moment you decide to join their network, to opening for business. The franchisor will know exactly what you need to do to be successful and the key is to follow the model to replicate this success in your business.
It is in the franchisor’s interest that you perform to the expectations of the network; this strengthens your business and in turn their business, which combined with other network partners, reaps rewards for all that operate under the brand.
It is for this very same reason that you can expect a franchisor to have controls and measures in place to ensure compliance across the network. Compliance is key to maintaining quality, operational effectiveness and brand reputation. Ongoing support will also be present to help when and where required.
How to find the perfect franchise for you
There are many ways you can start your search for a franchise, but you should ask yourself these questions first:
1. Why are you are looking?
Do you want a lifestyle change? Do you want to build an asset for the future? Maybe you want to go into a business sector where you can make a positive difference to other people’s lives or businesses. Consider this in your search.
2. What is your budget?
All franchise opportunities require an initial investment, however you should be clear on the overall required investment before deciding. This will include working capital whilst you are building the business to a point of generating healthy income.
After identifying the overall investment needed, decide if you have, or can, obtain adequate funds (there are UK banks and specialists that have franchise teams to help with this). One of the biggest risks to new businesses is to underestimate required funds at the start so it is important to be clear on the financial commitment.
3. How much time do you want to commit?
There are two elements to this, the first is to understand the working hours required to generate the projected profit a franchisor may provide. All networks experience varied franchisee performance and it can be appealing to see a franchisee earning £60,000 a year but, if they are putting in a 70-hour week to do so, it might not be for you. Make sure you understand the balance and that it is right for you and your family.
The second element is the length of time you want to be in business. It is not unusual for a franchisor to ask your future plans on this point before accepting you into their network. Typically a franchisee agreement is five years in length with an automatic right to renew after this term if you are performing in line with expected standard, however, some agreements can be 10 or even 20 years. Whatever time you wish to invest, ensure this enables you to see the return you are looking for.
4. What do you enjoy?
If you are passionate and enjoy what you do it makes the job much easier! The franchise industry provides a wealth of opportunity; from home care providers, business consultants, children’s activities through to chimney sweeps, so there is no reason to be stuck in a business you don’t enjoy.
Next: Do your research
There are many opportunities and many reference points for franchising but there are some key market place insights to be aware of.
Firstly, franchising is not regulated and therefore anyone can advertise as a franchise. This is not helpful for you when trying to identify a trustworthy partner for your investment. The good news is there is support available to you during your due diligence process.
Check out the bfa
The British Franchise Association (bfa) was established 40 years ago and accredits business format franchises. A company doesn’t have to join the bfa but those that do, do so because they are committed to franchise in an ethical way. You can visit www.thebfa.org to see a list of accredited members.
Visit franchise exhibitions
Franchise exhibitions are another great way of not only seeing franchise opportunities on offer but getting a real feel for the brand, team culture and their representation in a competitive environment. Often at an exhibition the senior team will be available, so make the most of the opportunity to speak with them and keep in mind that you will be partnering with these people to grow and run your business. There are a number of exhibitions during the year.
Take a look at discovery days, franchising web portals, magazines and franchisor websites
… These are all methods of marketing engagement and the recommendation would be to spend time looking at what’s on offer. Once you have found a franchise model you like, compare the market and make sure you have found the franchise team you want to work with.
Franchisors want people that know franchising so if you are well researched, you are well on your way to becoming a franchisee.
For more information or to discuss any queries you may have on franchising, visit the bfa website here.