Looking to buy a franchise

If you are considering buying a franchise, there are a lot of articles and help out there. A lot of it though is just simple generic advice written by people who have never had a franchise. Nothing against it of course you need to talk to as many franchisees as you can, visit franchise exhibitions etc. I will try and give you some advice you might not find elsewhere.

1. Understand yourself what you are looking for both for now and the next ten years. You might want a little van-based franchise where you are not expected to build a business. Nothing wrong with that but you also might be looking to build a decent business or a multi-site operation, all possibilities are there in franchising. You can look at building something and selling it on the same as any other business. This is an area of business and your success will be mainly built on your ability. Do not think you can sit back and the franchisor will look after everything for you. They will help guide and give you a system to work to but at the end of the day the success will be built on your ability. Business maybe a new field to you read and learn all you can about the mechanics and psychology of running a business. You cannot succeed by books alone but learning and gaining experience is a powerful weapon. You would not start up as a plumber without learning first how to do it, yet you put all your savings into a business venture with no experience. Some businessmen never get on that learning curve the successful ones never get off.

2.   Most people start looking at an area they are used to but don't forget a franchisor can teach you how to run their business model. Don't dismiss areas you have never considered before. You are going into a business not buying a job and in time hopefully will be managing a decent sized operation.

3.   Talk to as many franchisors as you can to find the franchise you feel comfortable with. Ask them plenty of questions the more the better. A franchisor will be happy to answer, and it shows you are serious about what you are doing. Ask them their 1, 3 and 5 year plans. It is important you understand where they are taking the franchise. A good franchise will be excited and love talking about this area. A bad franchise will have no plan, seems odd not to have a plan but some do not. They just carry on as before and do not move forward. If you think the internet is important ask them their views and plans for local internet presence. Most franchisors are surprisingly poor at local exposure on the net. Do they help and offer training with business Facebook, twitter etc. What training do they offer have they any in house business coaching. Ask what books they recommend this will show if they are interested in business development. Do not be afraid to write a list of questions to ask if I was a franchisor and someone came with no questions I would not be impressed.

4.   Once you have narrowed it down to a shortlist then the serious work starts. As now days it is easy to check companies finances. Run a check on the company’s finances ask your accountant to look over them. Do the same to their franchisees.

5.   Talk to a range of franchisees make sure you include new starters, those out of the honeymoon period and the top franchisees, also those not doing so well. Visit them talk to their staff make sure you would feel comfortable operating the franchise. If you feel you are lacking in a certain area be it finances, marketing, sales understanding business in general ask what help is given in those areas. All the time look at those franchisees and think what could I add to improve things. Remember even the best business can be improved upon.

6.   Ask head office if there are any resales might be better to pay more but you will have an ongoing operation. Ask the franchisees if they would look at selling it will take a lot of money time and effort to get started. A resale would give you a wage from day one. Ask them their weak points use it as a learning experience.

7.   Ask head office how many franchisees have sold, packed up, gone into administration or been terminated. Ask franchisees the same question nothing wrong with people selling up but the other areas can set alarms off.

8.   Cash flows and financials get an accountant to look over them also other franchisees to see if they are realistic. Ask head office how they produced those figures are they the average of all new starters, taken from top new starters or and I’ve seen this just made up.

9.   Understand the contract they are often non-negotiable a franchisor cannot have loads of different contracts out there. Look at what happens if it all goes wrong and you want out. The contract will be all in the franchisors favour and you will find that they have a right to fees till the end of the contract, non-compete clauses etc. once in do not think you can just walk away, as there will be consequences if you do. Be aware that not all franchisees make it and like any business people lose their money, homes even end up divorced due to the stress.

10. Do not be afraid to dig for dirt on the company but always remember that if you want something to be you will listen to all the good points and ignore and make excuses for the bad. Talk it over with your partner most franchisees of the year are a partnership normally the man takes the credit but the real strength is the wife.

11. Things I liked about being a franchisee which maybe you will not be considering. Business can be lonely with a franchise you have others going through the same experience. By yourself you can not ask a competitor for help and advice if going through a bad patch but with a franchise there is no end of support. I remembe a franchisee saying he could most probably make as much money outside the franchise but would not be sitting here having a drink with a crowd of other franchisees he enjoyed being a franchisee. Standards as a franchisee can not drop. We all start with great ideas wearing uniforms always looking smart etc. As a franchisee you have to keep those standards up and alive. Just look at your local McDonalds or Costa compared with Joes coffe bar. The former will always be clean no food on the floor etc. Joe will start with all good intentions but after a while will not notice standards slipping. Being a franchisee certainly helps to keep these standards up. You will have to pay fees but as a part of a respected brand you will be able to charge more for your service. If you are competitive you will see a friend doing better but they will have no problem helping and advising you, try asking a competitor to do that. Things like GDPR terms and conditions on invoices, building websites, marketing campaigns are all taken care of by the franchisor. As you grow the franchisor can give advice on any difficulties you experience, it could be cash flow or staff retention. A high a percentage of businessmen struggle to keep staff. A good franchisor will help you understand the problem. No doubt the problem will be you, by yourself how would you ever realise what you are doing wrong. By yourself you will find a comfort level but within a franchise you will always be encouraged and motivated to move to the next level. Franchising is not for everyone but if you think it is right for you go ahead.

SOME DISADVATNTAGES OF BEING A FRANCHISEEE

1 You have to pay to join, can be a very high cost as well

2 Regular fees normally a % of turnover, pretty standard to have a fee and a marketing fee as well. These can be just the beginning. I have seen extra fees for national account jobs passed, extra admin fees etc. Make sure you understand all fees involved.

3 You are a part of a group make sure that suits you. If you are a bit of a moaner and whiner, being part of a group will only feed those traits.

4 Politics - you may find a certain in crowd get more from head office than you do. If you help head office and work with them, should avoid this.

5 Thinking like a franchisee/manager rather than a businessman. Many well most franchisees think like management and rely on head office for everything. A franchisee told me he gets no local marketing help. I said well do it yourself, you are a businessman. Start your own Facebook page put your company on Google maps. Look for your own marketing advice, sitting there waiting for head office could be a long wait. Franchising should be a two way thing with ideas and initiatives coming from both sides. Franchising unfortunately will make you think more on the lines of a manager. I noticed when I came away from franchising for a while the ideas really flowed. When finally deciding to sign up I realised I had to keep thinking I am a businessman and keep the ideas flowing. I now find sharing them with the group can help refine the idea and we all benefit. If you are by yourself and you have a problem you search for an answer. As a franchisee you often stop thinking and blame the head office. You may find this blame culture they will blame you you will blame them and nothing gets sorted.

6 Restrictions luckily under European Law you can not be restricted to work in a certain area. You might agree not to advertise in other areas but if your local client has a lucrative job in another part of the country, it is up to you if you pass it on or keep it. Another type of restriction I remember speaking to a grass cutting franchisee who had the opportunity to look after the whole estate. Planting cutting trees designing the gardens etc. The franchisor stopped him restricting him to just grass cutting. Some agreements dictate you can not have any other business interests. Fine for most who would rather concentrate on the one thing, but might not suit others.