Which Franchise is Right for You?February 26, 2014
According to the NatWest bfa Franchise Survey, at the end of 2011 there were 929 different franchise businesses within the UK, contributing some £13.4 billion to the economy. The survey concluded that despite the tricky economic conditions franchising was “holding up well” with lower failure rates than those seen in the wider marketplace.
With this in mind, it is perhaps not surprising that the UK is seeing strong demand for franchising opportunities. But how do you decided which franchise is right for you? Whilst some decisions may make themselves, for example vegetarians are perhaps unlikely to choose to take on a fried chicken outlet, that still leaves a wide marketplace encompassing retail and food outlets, personal and business services, hotels and transport. Wading through all the opportunities on offer can be overwhelming but there are a few questions which you can ask which will help you to decide which franchise is right for you.
What interests me?
We’ve quoted this before but Richard Branson’s idea that “a business has to be involving, it has to be fun, and it has to exercise your creative instincts” gives a strong indication of likely business success. Even though you are buying into an existing franchise operation, you have to make your franchise outlet work and if your heart and soul are not in it then you are doomed to failure. So ask yourself:
- What field of business interests me? Look at the bfa website or attend a franchising show to see the range of franchise business types on offer.
- Do I want a 9-5 outlet or am I prepared to work evenings and weekends? Some franchises such as running a pub or teaching sports will require unsocial hours, others such as accountancy or business services may be more regular.
- What qualifications will I need? Some franchise operations need no qualifications, others such as food outlets may only need attendance at a food preparation or hygiene course but there are some such as those offering financial services or child care which could require a lengthy training and qualification programme.
- Am I prepared to supervise employees? If the answer is no then choose a franchise which is designed for the sole trader.
What research do I need?
When setting up any new venture the golden rule is that you can never have too much research. Don’t take anything at face value, check and check again and keep copies of all documents which you receive along the way. In particular find out:
- Is your chosen franchisor bfa accredited? Whilst this is no guarantee of success each bfa member has passed a strict accreditation process.
- Is the field already saturated in my area? Just how many coffee shops can a town sustain? The franchise may be successful in some towns but the area offered to you may already be well served with other outlets. Talk to existing outlets, observe footfall, research the marketplace. Remember that the franchisor’s marketing literature is designed to attract you and should not be a substitute for your own research.
- Do the figures stack up? Here again remember that what works in one town may not work in another. Check the figures carefully, prepare your own cash flow forecasts based on realistic rents and other costs in your area, ask to see accounts from other franchisees and to talk to existing franchisees about their experiences.
- Where is the marketplace going? Do some general research on the trends in your chosen franchise field. Just because a franchise is successful now doesn’t mean it will always be so in the future. Think of recent high profile retail failures to see how changes in technology and internet usage can render a seemingly solid business defunct.
What is the franchisor offering me?
Part of choosing which franchise is right for you involves deciding if the package on offer will suit your own requirements. The level of back up and support will vary between franchisors so find out:
- How much will my buy-in cost? This may include up-font fees, ongoing support or product costs and annual fees. Don’t be afraid to negotiate and make sure that you understand the size of territory which is on offer.
- How much support is on offer? Some, thankfully few, franchisors will hand over a bundle of documents and leave you to get on with it; others will provide an intense level of support, diminishing over time as you become more adept. In the NatWest bfa survey, the most common reason for dissatisfaction among franchisees was a lack of support so talk to existing franchisees about the level of support provided.
- What price reputation? A franchisor/franchisee relationship is a symbiotic one so find out what steps the franchisor will take to maintain a strong reputation.
Finally, once you have decided what franchise is right for you, don’t sign anything until it has been checked by a franchise lawyer who will help you to understand exactly what your obligations are.
How can we help?
Let us help you with our free Telephone Consultation to help you decide which Franchise is right for you.