So you think you want your own business and have decided that franchising is the right way to start, well before you dive in at the deep end here are 10 tips for you:
1. What type of franchise will suit you best?
Franchise opportunities come in all shapes and sizes. Do your research and consider the format that suits you best and whether it matches the skill set that you will bring to the business. Think about whether you want to take on a hands-on role and run and operate your own business or do you want to manage a team of employees?
2. Is it an established franchise?
Many people will see an established franchise as a safe bet as they will benefit from the existing reputation and goodwill of the business which may make it easier to attract customers. However to be at the launch of a new concept can be an exciting challenge.
3. Is the local market right for this business?
This question follows on from point 2 above. Think about the local market. Who are your prospective customers? What is the local competition like? Is the market already saturated?
4. Talk to other franchisees
Talk to other franchisees already in the network. Try and meet not only the ones that the franchisor may put you in touch with but also some others. Ask them about the business and how they get on with the franchisor.
5. Budgets and business plan
Work out your finances carefully. You will need a sound business plan especially if you need to borrow money to launch the business. Think about the initial capital cost and work in progress. Make sure that you will have enough money to support you and your family personally in the early days as the business is getting off the ground and allow for contingencies.
If the franchisor asks for a deposit you should check whether this is refundable or not. You may decide as a result of your due diligence or initial training that you do not wish to proceed.
7. Is the franchisor a member of the British franchise Association?
The British Franchise Association (BFA) is the national trade organisation for franchising in the UK. It promotes ethical franchising and can assist both franchisees and franchisors. All franchisor members of the BFA are vetted before they are admitted to membership and they have to have agreements meeting the BFA’s own minimum standards.
8. Sole trader/company/LLP/partnership – who is the franchisee?
The franchisor may recommend a business format to you but if not consider which format is best for you. If you are a group of individuals always consider putting in place an agreement between yourselves setting out your rights and obligations to each other and what will happen if one of you wishes to leave the business.
9. Think about the future – get your affairs in order
Anyone starting a business should consider what would happen if they became ill and were unable to work or, in the worst case, if they died. The franchise agreement should include provisions dealing with each situation but it is important that your family are aware of what the agreement provides. Generally there are timeframes to be met for notifying the franchisor and dealing with the business. If you haven’t already done so, make a will.
10. Take legal advice from a specialist
Finally take advice on the agreement from a solicitor specialising in franchising. Do not rely on what the franchisor tells you about the agreement – make sure that you fully understand how the agreement works, your rights and obligations and all restrictions imposed upon you. The agreement is likely to be a lengthy document and inevitably will be weighted in favour of the franchisor. The BFA has a number of firms, including Tollers LLP, who are professional advisor members who can provide independent advice to you.
For more information in relation to franchising please talk to Tollers on 01908 396230 and ask for Liz Appleyard or Ayesha Chandegra our franchise specialists. We operate from offices in Milton Keynes, Northampton and Corby.