Turning your franchise dreams into business reality is a complex process, so make sure you set off on the right foot by following these ten steps to success.
Turning your franchise dreams into business reality is a complex process, so make sure you set off on the right foot by following these ten steps to success:
Be honest with yourself – One of the greatest advantages franchising offers over starting a brand new business alone is that a good franchisor will support you every step of the way. You will also have access to training and will be able to develop your skills. However, from the outset you will need to have the right abilities, personal attributes and a willingness to work hard. Not everyone is cut out to be a franchisee and it’s important to think about your suitability before beginning your search for an appropriate franchise business. Only then can you be sure that taking on a franchise is right for you, and that you take on the right franchise.
Research the market thoroughly – Look at the industry in which the business you are interested in operates. Is the market growing, stable or declining? Will it be subject to fads or seasonality? Is there much competition? Is the product or service price sensitive? Only by answering questions like these will you be able to make decisions on what business is most suitable for you and whether you want to work in that marketplace.
Investigate the franchises available – Once you have found one or two sectors you are interested in, it’s time to find out what franchises are available in those areas. There will probably be several possibilities, so make sure you research them thoroughly. Read all the marketing materials you can, but bear in mind that the franchise company compiles this information so it will be biased in its favour. Start making a list of questions to ask the franchisor as soon as you begin your research.
Ask about the company’s history, the franchisor’s experience, the support and training you will be given, financial aspects such as fees, forecast revenue and profit, and so on. Franchising is a partnership and it is as much in franchisor’s interests that your have all the facts and an understanding of what’s involved as it is in yours.
Meet other franchisees – It is essential when considering investing in a franchise to meet people who have already done so. Ask your prospective franchisor for a complete list of all the franchisees in the network, not just a select few who have been specifically chosen to talk to you. If the franchisor is unwilling to give you this information then ask why. Depending on how satisfied you are with the answer, consider what this tells you about the company you are considering joining.
Compile a list of questions to ask existing franchisees. However, be careful not to take everything an existing franchisee tells you as fact. Franchising depends on the relationship between franchisor and franchisee and there can faults on both sides. So use these conversations primarily to gauge what it would be like to be a franchisee for this company and whether you can see yourself as one.
Be realistic about what you can afford – Your investment in a franchise will comprise all or most of the normal costs of setting up a business, such as working capital, equipment, staff recruitment and professional fees. These can vary depending on the type of franchise business – for example, some provide equipment to get you going or premises for an initial period. Starting a franchise will usually include paying an initial fee and some kind of ongoing management fees, both of which should be taken into account when establishing how much you can afford to invest.
Be realistic about your earning needs – You will never be able to calculate in advance exactly how much setting up a new franchise will cost or make you, but you need to make sure the franchise you invest in will be able to provide you with the funds needed for your lifestyle. Be realistic about the profit it is likely to generate and identify what you need to make, at the very least, in order to cover your existing liabilities.
Ensure you can raise the funds – Reputable banks that support the concept of franchising tend to have arrangements with established franchise companies, but you are under no obligation to use the bank your franchisor recommends. Shop around for the best deal, read the small print, and bear in mind you can borrow much of what you need to get started in franchising, sometimes up to 70 per cent of the initial investment.
Seek professional advice – At some point in the process of buying a franchise you will be presented with financial projections and a franchise agreement. By this stage, you should have an in-depth understanding of the nature of your chosen franchise business and probably have a certain degree of trust in your franchisor. It is, however, still advisable to seek impartial advice from an independent franchise adviser before signing on the dotted line. It will be money well spent if it saves you from making expensive mistakes.
Prepare your family and friends – As the time for launching your franchise draws nearer, you will inevitably be caught up in the finer detail of planning your new business. It is easy to forget to involve those people around you who will be directly affected by your new venture; your friends and family. At some point in the early stages of your business you are likely to need either their help or understanding, so it’s a good idea to involve them or at least inform them about what the future holds.
Go for it! – You’ve found the business for you under the umbrella of an experienced and supportive franchisor, with the backing of your friends, family, the bank and help from professional advisers. All that remains is to make it work. If you’ve researched and planned in the manner laid out here and are entering franchising with your eyes open, you’re all set for the best possible start to your future in franchising.