The path to successful franchise investment
If you are thinking of investing in a franchise there are some key considerations that you need to make
First decide whether franchising suits you. If you have a strong entrepreneurial spirit and want to re-invent the wheel, then you may not be suited to franchising, which involves following a proven system.
Seminars are a great way of learning about the benefits and pitfalls of investing in a franchise. Lloyds TSB sponsors a series of free evening educational seminars held throughout the UK – these are useful events for people seriously thinking about beginning their franchising journey. For further details and booking information visit the www.franchise-seminars.biz website.
Next eliminate opportunities outside of your price range or those that will not offer you the financial return you need, then scrutinise a range of franchises to see which one is most suitable for you. It is sensible to begin your research with British Franchise Association (bfa) member franchise brands, as they have passed a rigorous accreditation process and adhere to the standards laid down by the bfa. While bfa membership is no guarantee of success, it is a good starting point.
Franchise exhibitions are an efficient way to research many companies in a short period of time. The National Franchise Exhibition takes place at the NEC in Birmingham on the 30 September and 1 October. Free tickets are available on pages 165-166 of this magazine.
It is important to consider what you are good at and what you enjoy doing. Your existing skills and experience are an asset that should be taken into account. Your family life and personal circumstances are another important consideration. Ensure your loved ones are involved in the selection process from the outset.
Use the internet to fully research each individual business, the market it operates in and the history and track record of the chosen franchise brand. Speak to trade associations for their expert view of the type of business you are interested in. Remember it is a two-way process – the franchisor will also be assessing you to decide whether you match what they are looking for.
Speak to as many existing franchise owners as you can by asking the franchisor for a contact list of the entire network. Look for franchise owners with a similar background to yours and speak to those at differing stages of development to give you a broad view of the business you are looking to enter into.
It is essential that you receive the right professional guidance and support. By speaking to the bank’s franchise department rather than your local Business Manager, you will ensure that you get the best advice available. The franchise specialist banks are a great source of impartial advice. The legal agreement is a substantial document and it should be checked by an experienced franchise solicitor, who will help you fully understand it before you sign on the dotted line. Lloyds TSB offers a franchise agreement review service at discounted rates in conjunction with an experienced specialist solicitor. Franchising offers the opportunity
to run your own business with a potentially high return. There are never any guarantees in business, but you can increase your chances of success by following these key steps.
It is important that you take your time with your research as your decision could result in a long-term commitment and you will have plenty of time to reflect on a mistake – so try not to make one! With some careful consideration you could find yourself as the owner of a company with significant potential for success.
STEP 1 – Consider whether you are suited to franchising
STEP 2 – Attend a franchise seminar to learn more about the benefits and pitfalls
STEP 3 – Eliminate opportunities that are too expensive
STEP 4 – Eliminate opportunities that will not deliver the revenue you require
STEP 5 – Start your research with well established British Franchise Association member brands
STEP 6 – Research a range of different franchise brands across many industry sectors
STEP 7 – Self assessment – what are you good at and what will you enjoy doing?
STEP 8 – Does the business fit in with your family’s requirements?
STEP 9 – Market Research – customers, suppliers, competitors, trade associations, industry
STEP 10 – Take a much closer look at your chosen franchise – speak to existing franchise owners
STEP 11 – Seek professional advice from franchise specialist banks, solicitors and accountants
STEP 12 – Have you made the right choice? If you have any doubts start again from Step 1