Franchise FAQ

Q. HOW SOON CAN I EXPECT TO MAKE MY MONEY BACK WITH A FRANCHISE?

Answered by Gary Chambers General Manager of Apollo Blinds

GARY SAYS: Franchisors should have a very clear financial framework contained within their Franchise Information Memorandum which outlines the projected figures for a new start franchise business. These figures should be based on the past performance of new franchisees so that it gives people considering investing a realistic idea of what is achievable.

Of course, this is a mid point and some investors easily surpass these projections and others take their time to get to a point where they are achieving a level of business that a franchise owner can typically expect to make. Understanding these figures is crucial in determining when a prospective franchise owner can expect to recoup their initial return on investment and seeking independent advice is strongly recommended. Also, it is always a good idea to speak to an existing franchise owner to get their perspective on how their business performed against the projections in the first 12 months of trading.

For some franchises it could take years to make their money back because of the level of initial investment required, but in the case of our new low-cost start-up, Apollo at home, we expect franchisees to achieve this within the first 12 months.

Q. HOW WILL THE FRANCHISOR HELP ME TO ESTABLISH THE BRAND IN MY TERRITORY?

Answered by Rory Waterer, Managing Director of Urban Planters

RORY SAYS: It is in the interests of the franchisor to promote and grow its brand continously, and the opening of a new franchise territory is a perfect opportunity.

A lot of franchisors have a budget in their marketing spend set aside specifically to help a new franchise owner to get up and running. Some franchisors actively feed leads to their whole network (including a new territory) from their national sales and support team who are funded from the management and marketing fees levied from the franchise network. Most franchising sales and marketing material is already available in generic format and it takes no time at all to adapt it for use in a new territory or franchise.

Q. HOW SAFE IS MY INVESTMENT WITH A FRANCHISE?

Answered by David Corbett, Chairman of Signs Express ltd

DAVID SAYS: Franchising offers many advantages for people who want to start their own business. As with any new business venture, an investment in both finance and time is essential in making a franchise work.

A franchise is a tried and tested business formula which offers training, support and advice in all areas of the business to ensure its franchise owners have the best possible opportunity for success. In terms of the investment, a franchise owner who has an interest in the business model, enthusiasm and has completed research on their chosen industry has a much higher chance of success than a stand alone business. Results from the NatWest/British Franchise Association survey show that 93 per cent of franchises were profitable after two years compared to four out of five non-franchise businesses failing within the same period - there are no guarantees in business but a franchise is a much safer investment.

Q. DO I NEED PREVIOUS EXPERIENCE IN BUSINESS TO BUY A FRANCHISE?

Answered by Simon Dalziel, Franchise Director of Bluebird Care

SIMON SAYS: Most franchises do not require previous experience in the sector in which they operate, although if it is very specialised clearly they may. One of the advantages of franchising is being able to get into a sector you know nothing about as the franchisor will train you in the sector as well as their own systems and operating procedures.

At Bluebird Care the majority of our franchise owners do not have care experience. As with many other management franchises we seek skills, motivation and abilities of franchise owners to run their own business first and foremost but also we seek an empathy with the area in which we work of providing care in people's homes. It can often be easier to train someone who knows little about the sector in which you operate, as they have no preconceived ideas of the business.

Q. WHAT DO THE DIFFERENT BRITISH FRANCHISE ASSOCIATION MEMBERSHIP LEVELS (FULL, ASSOCIATE AND PROVISIONAL) MEAN AND ARE THEY AN INDICATION OF THE QUALITY OF THE FRANCHISE PACKAGE?

Answered by Pam Bader OBE, CEO of Molly Maid UK

PAM SAYS: A bfa Full Member must meet four key criteria: viability, franchisable, ethical and disclosure. Full members have a proven track record that shows they are 'established'. Associate level is the next step towards becoming a full but is less demanding in the length of operating, size of the network and experience criteria. Provisional membership demonstrates the company are taking reasonable measures to ensure that the business is properly developed and tested.

The three membership levels indicate to potential franchise owners the longevity and stability of an organisation. It also gives assurances, depending on the level, that a franchise works ethically and openly. However, anyone thinking of investing in a franchise should always thoroughly investigate each business they are looking into. At MOLLY MAID we hold two face to face interviews and encourage prospects to talk to members of our network. We want to know they are right for us, and, if they feel comfortable, we are right for them.

Q. WHAT PERSONAL QUALITIES DO MOST FRANCHISORS LOOK FOR IN PROSPECTIVE FRANCHISEES?

Answered by Steve Baker, Chairman of Local Services

STEVE SAYS: It might sound obvious but buying a franchise does not necessarily guarantee that you will be successful in business. It does however offer you a proven model to follow together with guidance from the franchisor and often, successful franchise owners within the network. While this type of help and advice is invaluable when starting a business it cannot make up for shortcomings in the franchise owner themself. Before considering whether an applicant will be suitable as a potential franchise owner the franchisor will normally look to satisfy themselves that they possess the following qualities;

• Good communication skills. The ability to put a potential client at ease and ultimately close a sale.
• The necessary drive and determination to succeed. Not everyone is cut out to run their own business. It's not always going to be plain sailing, staying motivated when times are tough can be hard is important.
• Adequate funding. Does the candidate possess adequate funds to cover both start up costs and expenses while training?