What is a Franchise?
A franchise is a business like any other but one based on a tried
and tested model that you can buy into.
The big advantage is that you get a business model that has been
tested, maybe a well-known brand or trademark to use and training
and support - all of which makes it more likely that your new
business will succeed.
In return you'll have to pay a combination of an up-front payment,
monthly fees and/or a percentage of profits and/or renewal fees.
You may have to purchase some or all of your stock from the franchisor
Someone else (the franchisor) has already set up the business
in another area and hopefully ironed out all the bugs and proved
that the business model works.
They will have developed the business and will have trademarks,
logos and branding that you can capitalise on.
They may run national advertising on TV, in newspapers and magazines
or online, they may supply you with customers or enquiries or
help you generate leads. If you haven't investigated franchising
before, you'll be surprised how many well known and 'high street'
names are franchises.
The help you receive in setting up will depend on the type of
franchise, but a franchisor might assist with any or all of the
following: Raising finance, choosing premises, training, recruitment,
PR and marketing.
Caveat
Emptor - What to look for when buying a franchise
As with any business opportunity, you need to look very carefully
before you commit yourself to a franchise.
Always, always, always take professional advice
from a solicitor (preferably one that specialises in franchise
work) and an accountant before investing. A few hundreds spent
on professional fees before you sign up can save you many thousands
later on.
This list is by no means comprehensive but it does contain a
few 'must do's' when investigating a possible franchise (or indeed
any business opportunity).
Why a franchise? Could you set up the business as well under
your own steam? Is the market expanding, static, shrinking? What
about the competition?
Is the franchisor sound financially? How supportive are they
once they've had your fee? Google them - then Google them again
with their name followed by 'sucks' in the query box - you'll
be amazed at what this can reveal!
Get their accounts from companies house and get your accountant
to take a look at them.
How are other franchisees performing? Don't take the franchisors
word, talk to franchisees in private. Find out where other franchisees
are based and be your own investigator - take time and watch their
premises - are they getting enough customers?, buy stuff off them
incognito, send mystery shoppers in, talk to their customers.
Find out if the cost of the franchise has gone up or down - why
is this? Are they happpy with support and training? Are they getting
a good deal on advertising?
What about stock - are they saving money because of the bulk buying
power of the franchisor or are they being forced to pay above
market prices because they are not allowed to buy elsewhere?
What if you don't hit the cash-flow projections by 10%, 20%,
50%? What if you get ill?
What if your business fails? What if the franchisor goes bust?
Conversely - what if your franchise performs well and you want
to sell it / lease it / give it to your kids? What is your exit
strategy? how much will the franchisor want to transfer or renew
the franchise?
What types of franchise are available?
The range of business types available to the potential franchisor
is huge and growing all the time and includes:
Accountancy | Book keeping
Car alloy wheel refurbishment | Car dent and paint repair | Car
repairs | Car windscreen repair
Carpet cleaning | Commercial cleaning | Domestic cleaning | Oven
cleaning
Computer
repair | Web design
Estate agency | Estate agents boards
Fast food | Coffee
Fitness Training | Gyms | Slimming clubs
Lawn care and maintenance | Pest control
Magazine publishing
Marketing
Pet care (food, grooming, pet sitting)
Printing | Vehicle graphics | Vinyl signs
Training | Tuition
Vending machines
Window repair
More information (external links - open in new window)
The
British Franchise Association
Franchise
Direct
The
Franchise Magazine
Franchise
Loan
