Franchise FAQ

Q. WHAT ARE THE ADVANTAGES OF BECOMING A FRANCHISEE OVER A STANDALONE BUSINESS OWNER - ESPECIALLY IN THIS TIME OF ECONOMIC UNCERTAINTY?

Answered by Carly Coomber, Director of Sliding Sash Solutions Ltd

CARLY SAYS: With the current economic uncertainty it is important to consider any new business investment carefully. Choosing to buy a franchise can have many advantages over setting up in business alone. A franchise offers a familiar brand name to build on, as well as a complete system of doing business, which can eliminate many of the risks of starting a business on your own.

Buying a franchise can reduce the investment of both time and money, as you will benefit from the knowledge and expertise of the franchisor. Many sole traders or owners of small businesses can feel isolated but as a franchisee you will be part of a team and have the backing and strength of a support network.

Currently obtaining funding to start a business can be difficult. Standalone businesses can be deemed risky by lenders but a franchise with a good record of success may be considered a safer investment.

Q. HOW SAFE IS MY INVESTMENT WITH A FRANCHISE?

Answered by Lloyd Evans, Chief Executive of Autosheen

LLOYD SAYS: A survey conducted by the British Franchise Association and NatWest Bank found that success rates for new franchise businesses were over 90 per cent, compared to a staggering 80 per cent failure rate of 'go it alone' business start ups. For those of us with many years of experience in the franchising industry, this comes as no surprise.

Buying a franchise is an investment in a proven business formula with an established brand, an identifiable marketplace and a track record of success. This means that unlike an investment in, say, the stock market, where the safety of your money or otherwise is entirely out of your control, the success of your franchise and future growth of your business is in your own hands. If you are prepared to work hard, research carefully and choose a franchise that is bfa accredited, well established and provides the ongoing support you need to grow, then your investment in a franchise will be a sound one.

Q. WHAT CHECKS WILL FRANCHISORS CONDUCT INTO A POTENTIAL FRANCHISEE'S BACKGROUND?

Answered by James Every, Managing Director of Hydro-Dynamix

JAMES SAYS: This can vary significantly between franchise types, and for some businesses there may be legal requirements to fulfil. The most common request is for a CRB check, especially if you are planning to work with children or if the franchise business may be carried out in homes, schools or even commercial customer premises. The franchisor may also run a financial check to ensure that your status is good - it is vital when you are starting a new business that you have sufficient working capital and you are unencumbered by unmanageable debts.

The initial franchise fee is usually designed to cover the costs of recruitment and training so the primary risk borne by the franchisor is largely reputational - will you and your performance live up to and help promote the brand? Consequently, much background checking is to assess your suitability and the level of support for your business, not just financially, but from your family.