There are plenty of reasons why you may have been seduced by the idea of buying into a franchise. Compared to independent startups, franchises have a far higher success rate, giving you the opportunity to walk into a potentially fruitful business which (at least feels like) it’s your very own.
Franchises are also a great route into running a business for those who may not have the business background or connections to secure startup finance or get the ball rolling on an entirely new enterprise. That’s because many of the resources, structures and training opportunities you’ll need to “make a go” of your franchise are already in place and ready for lift off. From marketing materials and supply chains, to locations and legalities, any good franchisor will have a tried and tested system in place for you to work within, based on a successful model.
Of course, no business is a “dead cert”. Ambitious, inexperienced startups can flourish while seemingly “safe bet” franchise opportunities founder, but if you choose your opportunity wisely, your next step in franchising could be a big success.
This guide is all about making a shrewd decision to help ensure you enjoy a positive and profitable franchising experience. There’s no predicting how a business will fare, especially in today’s climate, but if you follow our franchise assessment guidelines, you’ll give your franchising adventure the best possible chance of success and avoid many potential pitfalls too.
1. Do your research
With so many different franchises all clamouring for your attention it’s important to do your research before you narrow your decision down to a shortlist. There are some franchise opportunities which are unique, but many will concern a similar niche or have a similar model.
That means you’ll need to explore all available options to get a good feel for the market before you begin assessing your best options. Talk to other franchisees in your chosen field, find out more about the different costs and structures for each franchise and get to know as much about the background and history of each franchise before you move on to the next step.
2. Check accreditations
Once you’ve settled on your best options, it’s time to check out their accreditations. There are a number of different franchising bodies around the world which provide accreditation for franchises they consider to be “up to scratch”. It’s not a guarantee that your franchise will prove successful, but accreditation is a sign that the business in question is above board and does things by the book.
3. Crunch the numbers
Understanding the financial systems and models behind each franchise opportunity you’re assessing is essential as these can vary considerably from business to business. While some franchises require both an upfront fee and take on ongoing percentage of your profits, others will also ask for payment for securing your premises or require capital requirements during the early months.
Make sure you are clear on every single cost and have the finances to fund the whole enterprise. It may be helpful to work with an accountant to appraise exactly how much you can afford to invest and look over the figures with you.
4. Get connected
Once the finances have been appraised and understood, the next most important step is to get to know the people you’ll be working with. As you may have found in other roles, your colleagues and contacts can make or break a job. Get to know your franchisor and the individuals you’ll be interacting with most frequently in order to determine whether or not you feel you’ll be able to build mutually beneficial working relationships.
At this stage it’s also important to appraise whether or not you’re a good fit for a franchise opportunity. Think hard about the skills you have, the gaps in the knowledge, as well as the training and support you’ll need to grow your franchise. Then consult with your prospective franchisor to determine whether or not this support and education will be readily available to you.
5. Call in the pros
Finally, if you’re confident after all of the above steps, it’s time to call in the professionals. We mentioned consulting an accountant earlier to explore your finances and your potential franchise’s financial structure. You will also need to work with a solicitor to ensure everything in your franchise agreement is clear and correct.
Talking to a business consultant may also help give you perspective on your decision, and they may be able to help you look into things such as your potential franchise’s history, your franchisor’s track record and the potential of your chosen franchise.
Work through each of these steps and you should have developed a clear picture of any franchise opportunities you’re considering, allowing you to make an educated decision about your professional and financial future.
