Ask the Panel - Your questions answered

Should I avoid new franchise opportunities which have only just signed their first franchisees?
Peter Haynes, Kent

Nigel Toplis: Every business and every franchise has to start somewhere and it would be unfair and wrong to dismiss a business opportunity simply because it is in its first stage. That said, you do need to be extra vigilant and spend even more time on research. The approach I would adopt is as follows:

• Examine the business concept rather than the fact that it is a franchise: Does the concept have resonance? Is there potentially a strong market? Can you see a repeat purchase from customers?
• If the first point passes muster, then research the franchisor: Do they have experience in franchising? What is their personal background? What research did they put into the concept before launch?
• If you're still positive then look at the actual franchise package: What do you get for your money? How much training, marketing tools and ongoing support will you receive?
• Finally, quiz existing franchisees, if there are any, on the business and most importantly, on the support given by the franchisor.

As a final point of reference ensure that the franchisor is a member of the British Franchise Association, or is at least progressing to membership.

Roy Seaman: Deciding whether to invest in a new franchise depends whether you are a high, medium, or low risk person. If you are a high risk taker consider a new franchise opportunity just entering the market.

If you are more of a medium risk taker a business with a track record would be more suitable. For low risk takers a business that has been established for 10 years or more, or a franchise re-sale, would be the better option.

If considering investing in a new franchise ensure that they are Provisional Members of the British Franchise Association as they will have fulfilled the necessary criteria to meet this first base of membership level.

Mike Simpson: A new franchise can be a good opportunity as the price of the first few franchises offered is often less than later ones. Also at the beginning the franchisee will have the pick of the franchise areas. It may also be possible to reserve additional areas at a discount.

However, the prospective franchisee will have to be very careful in his research as he does not have the opportunity to ask existing franchisees about their experiences, so he will have to look at other areas.

The British Franchise Association should be asked if they have any knowledge of the franchise and whether the franchisor has applied for membership. The franchisor should have at least one, preferably two, pilot schemes operating. Ask to visit those pilots and judge how these are operating. Ask for sight of the accounts for those pilots and show them to an accountant for his opinion.

Phil Marriott: Even the best franchises, which you might automatically think of as a successful opportunity, had to start as a new franchise somewhere. Generally the idea with franchising is to be able to take advantage of a proven business model, so although a franchise is new to the market it should have been tried and tested to a certain degree. Franchisees getting in on the ground floor in a new franchise possibly benefit from a lower cost of entry than those who join later on.

That said, by going for a more established franchise you avoid opportunities where they perhaps haven't got all the answers worked out and ending up as a bit of a guinea pig!

Do you think franchises could be well suited to young people looking to get into business for themselves?
The Franchise Magazine staff

Nigel Toplis: Good franchising is essentially a marriage between the drive, ambition and personal skill set of a franchisee, and the systems, tools and business support of the franchisor. Young people usually have unlimited ambition, drive and hunger, as well as a desire to get rich and the fear of failure as key motivators.

However, many young people lack business experience, few will have run a business previously and only a minority will have any understanding of the associated complexities - this is where the franchisor comes in. A franchisor will provide the skills, support and experience for the franchisee, helping him or her to maximise their strengths and to manage their weaknesses. Roy Seaman: The majority of young people who want to start their own business do not understand the benefits of franchising over starting a business independently. Through franchising, young people can learn faster and in a safer environment. If a franchise doesn't work out for them, for whatever reason, they are able to sell the business on. Independently, they could potentially lose everything. Young people are keen to learn quickly and would benefit greatly from the advice and guidance provided by a franchisor, rather than a business mentor who will not know the business so intimately.

Mike Simpson: A franchise is a ready-made business model which comes with support provided by the franchisor in all the areas where the franchisee lacks experience. Young people generally are less experienced in business so they rely on this support structure while they gain the experience for themselves.

One of the main advantages of buying a franchise is that someone has made all the mistakes in getting to the business model that is offered to the franchisee. Always ask other franchisees how good the support structure is before purchasing the franchise, don't always rely on glossy sales literature.

Phil Marriott: Yes, subject to the individual having sufficient general acumen to deal with a business. Age is no barrier as far as I see it. In fact, the whole concept of franchising is having a hand-held approach - someone who is younger can possibly benefit even more from this approach through obtaining a shortcut to experience.

Being deaf, are there any special considerations I need to make when considering a franchise? James Wengarf-Townsend, Surrey

Nigel Toplis: While there are some business situations where being deaf makes it more difficult to do the job, my advice is to approach a franchise opportunity without, initially, any consideration to being deaf. Go through the normal process of evaluation from cost to industry type and from competitor analysis to interviewing franchisees (look at my book, 60 Minute Guide to Franchising, for more information).

Only once you've narrowed-down the number of opportunities should you bring deafness into the equation, by determining if you face any insurmountable obstacles. If so, simply eliminate those franchises from your list. Finally, and most importantly, examine the input and position of your franchisor - they should treat you not as a deaf person but as a future franchisee looking for a business opportunity.

Roy Seaman: A franchise from the service sector would be ideal where communication is not so essential as delivering a good service. With a 'job' franchise the focus is on developing specialist skills. Similarly an internet-based franchise could be suitable where face-to-face communication does not play such a large part.

Alternatively if a management franchise is the preferred option, a person may want to consider going into partnership with someone else where the roles can be more easily designed and allocated to suit the individuals.

Email us your views on the issues discussed here and view other readers' feedback online, including Recognition Express franchisee Adrian Simpson's personal view on being deaf and running a franchised business.

To send your missive now, email letters@thefranchisemagazine.net