Franchising your business successfully
A quick internet search will confirm that there are a bewildering number of advisors, consultants and so called experts offering help to develop your business by franchising.
A growing number of people are advertising a full franchise consultancy package for around £5,000. Their websites paint an impressive picture often quoting testimonials from numerous satisfied clients who have little or no track record of ethical franchising. How do you avoid the pitfalls of selecting a rouge consultant and falling prey to one of these 'vultures'?
There is one certain way to ensure that you will receive ethical advice and support in developing your franchise model. Choose a franchise consultant that has been accredited by the British Franchise Association (bfa). Professional advisors who are affiliated to the bfa must pass a rigorous accreditation process and demonstrate a track record of franchising success before they can join.
Rogue franchise consultants are unregulated and there is little you can do should you receive bad advice. The age old legal maxim of 'buyer beware' springs to mind. The unscrupulous consultant has no interest in whether the franchise is ultimately successful or not. You would have paid them for their consultancy work before you even recruit your first franchise owner.
Some consultants also offer a franchise owner finding service which on the face of it sounds appealing to the franchisor. This will only work if they are focused on recruiting the right calibre of potential investors and the franchise owner is closely involved throughout the recruitment process. Ultimately the final recruitment decision must rest with the franchisor. Some of these consultants are just interested in their finder's fee, regardless of the suitability of the prospective franchise owner to run the business successfully. This is hardly the basis for an ethical approach to franchise owner recruitment.
With any consultant, you are investing in their expertise, know-how and time. It is a false economy to go with the natural inclination of selecting the cheapest available option. The bargain basement offers for franchise consultancy will often result in less time dedicated to developing a comprehensive franchise system. Short cuts taken during this process could lead to big problems in the future.
There is another major drawback of trying to franchise your business on the cheap. The banks with specialist franchise departments will want to evaluate the franchise opportunity before they consider financial assistant to prospective franchise owners. If the franchise opportunity doesn't pass their scrutiny the bank will not assist potential investors. This would also result in a lack of credibility in the franchise and the probable loss of suitable franchise owner candidates. The reality is that franchising a business is a complicated process. It needs to be done in the right way by using the services of a reputable, experienced and bfa accredited professional, this is the best way of achieving success. Each business is different and so are each business owners' goals, so an individual approach is needed to franchise a business. The 'off the shelf' approach adopted by some unregulated advisors to franchise development simply doesn't work. This would be a recipe for heartbreak and failure.
The legal agreement is a vital element of setting up the franchise. Reputable consultants will only use the services of solicitors who are experienced in drawing up these contracts. As each franchise is different the legal agreement should be tailored to the franchise. Simply downloading a franchise agreement template from the internet will not give your business, brand and network of franchise owners sufficient protection. Beware that some consultants offer little more than a legal agreement template as part of their low cost package which is often out of date and unenforceable when required.
Developing your business through franchising is an important stage in your business lifecycle which could have a massive impact on the future success or failure of your business.
Written by Richard Holden Lloyds TSB