­It’s time to take a Strategic Approach to Franchise Evaluation

Franchise Development Services, FDS, are continuing to promote this service aimed at individuals who are seeking to acquire “An Established Franchise For Sale As A Going Concern” or simply make a direct approach to the franchisor for a new start franchise.

FDS’s Founder Roy Seaman and Franchise Sales & Resales Consultant Jess Bains are set to further develop this service, designed to help create a ‘corporate profile’ or an ‘Individual profile’ that will help the franchisor understand the seriousness of the applicant who is utilising the FDS services to help them obtain the franchise. The new service can make the difference between owning a successful franchise or not. “The first thing we often discuss when we meet with individuals is whether they have an actual passion for a sector or a brand and then to find out why this passion exists. Is it a dream that they have always had or is it their family that are trying to suggest to them that they really should find a franchise, where they can use their many years of experience,” explains Roy.

The second phase of the service will be to meet and discuss the specific sectors of interest. If they have a passion for electronic and gadgets, then franchises in that sector, such as CeX, are recommended. Should they have a passion for food, which is the biggest sector in franchising, and then further information would be gathered, such as whether the investor wants to have a full restaurant concept or a fast food franchise such as the Subway brand.

Then FDS establishes who is going to be involved in running the franchise. The investor is the head of the operation, but will their family be involved, are there other friends and colleagues going to be involved in, helping to get the business up and running? Then FDS will look at what assets the applicants have to own the franchise. If it is an individual, do they have any existing businesses that will need to be sold, or do they have assets in property? Then more importantly, how much liquid capital is available for investment? What is their experience in running a business and developing them and then either selling or retaining in their portfolio? These are all questions that can make a big difference when a franchisor looks at recruiting a new franchise owner.

“One of the key parts of the service is to look at the way in which the applicants assets sit at the moment. Is it cash in the bank, is it a property, who are we going to recommend to the applicant that they approach, is it a bank, is it a specialist funding organisation? The liquid assets side of buying a franchise is very much an integral part and something that can decide if a franchise is going to be a viable option,” highlights Jess.

The third stage is to look at timescales. Realistic timescales can be anything from three months to two years, it depends what the current situation is. Obviously, the longer timeframe, the easier it is to find what they are looking for. Normally it takes about six months from the time the client meets with FDS, to finding a suitable brand, that is worthy of their consideration and then through to the completion of the acquisition of the franchise.

Once timescales have been looked at then a question of geographical area must be looked at as Jess explains: “Many people want to remain in a geographical area where they are currently employed or are currently involved due to friends or family being located in the same area. Others, particularly those who are coming from abroad, prefer main cities, especially London, there is probably half a million people in London operating a business today who are not going to move out of the capital.”

London is always the number one choice for the majority of businesses due to its industry pull and capital city status. The geographical area of a franchise operation is of great importance and if a prospective owner has a clear indication of where they would like to operate in, then a database check will highlight franchisors that may have a franchise for sale or as Roy notes: “If the database does not bring up a perfect match, then we can go directly to existing franchise owners to see if they are interested in selling.” The last key area to look at with a potential franchise owner is the level of risk involved, to ensure a comfortable resolution, which is going to deliver some realistic expectations, is found.

“You can have investors who will have half a million pounds and want to make certain that it is placed within a low risk franchise that will steadily bring in profits, and then there are those who are looking for something with good profit potential. The higher the profit potential, normally the higher the risk and this is something that we sit down and discuss in detail with the investor, so that they fully understand the level of risk and most importantly the profit that is being achieved with existing franchise owners.

One client who has benefitted from this service is Ajaz Saber, who bought a Cash Converters franchise with help from FDS. “I knew about FDS and their work from reading The Franchise Magazine and going to franchise shows. I made contact with Jess by accident/luck/kismet! I had been looking for a franchise business on Dalton’s Weekly and found one that looked interesting.

Jess was marketing that particular business and made contact. After a few calls, he established what my needs were and, using his inside knowledge of the businesses and making use of his contacts, he made me aware of a business that suited me perfectly well that was soon to be available. It was brilliant for me and for Steven, the vendor. The process itself was really smooth.

Jess helped with all the details, big or small. He was available to help whenever there was an issue, although as he was so thorough in the original sales documents, there was very little that could have gone wrong!

I would wholeheartedly recommend Jess and FDS to any and everyone! If you are either selling or buying, they make the whole process simple.

They are very professional and knowledgeable about the whole buying/selling process and work with and help both parties with practical advise and are impartial and fair to all. The franchise business that I have bought is a completely new line of business for me. It has taken some time to “learn” the dynamics of the business.

I have spoken to Jess since the purchase was completed and he has been nothing but helpful with some good advice and help. In due course, I am confident that I will ask for help from Jess and FDS for the next venture!”