You’ve found the business sector for you and have whittled your list of prospective opportunities down. Now its time to quiz the franchisor
Having looked at your own background, interests, available funding and qualifications, you will have been able to identify the business sector which will fully utilise your skill set.
Once you have shortlisted your opportunities of interest, it’s time to delve deeper and discover if your potential franchisors tick all of the right boxes.
When taking up a franchise, you are entering into a long-term business relationship with the franchisor – so it’s extremely important you check their background and business performance before making your commitment.
In the search for your new business venture you will probably visit a franchise exhibition, however in your enthusiasm, don’t rush and be wary of franchisor pressure to sign up – a reputable franchisor will be making sure you are suited to their franchise as much as you’re deciding if their right for you. You must be able to trust and work with the franchisor and the franchise company’s staff – especially the Directors and senior Managers. If you have the slightest doubt as to the integrity of any of the people within the franchising company think extremely carefully before you go ahead with them. Trust your instincts – if you feel uncomfortable during the selection and recruitment stage it is likely that there are grounds for concern.
Feeling uncomfortable about trust and relationships may not necessarily mean that the franchisor is untrustworthy, but it does probably mean that the ‘fit’ may not be right for you.
Do they have solid trading history?
One of the biggest benefits of joining a franchise is that you can see your potential business success by looking at the networks past and present trading history. If you’re looking into a franchise that has been established for over 10 years and has over 50 successful franchise owners, you can feel confident that you’re onto a good thing. However, make sure you speak with a range of franchise owners, from newly launched to those who have been with the franchise for years – you can’t just take the franchisor’s word that everyone within the network is satisfied.
Are they financially sound?
Successful businesses – not just franchises – should be based on a sound business and profit model. Unless the business is a brand new franchise, you should be able to view at least the last three years of financial reports. These reports should be accurate and readily available – it’s by these reports you will be able to determine your financial requirements, targets and continued success of the franchisor.
Is there a genuine head office support structure?
The level of support and training available from the franchisor both start-up and later on will be crucial to the success or failure of your business. Remember, you’re in franchising for yourself but never by yourself. You need a franchisor who will be there to support you throughout your franchise term, especially in those first critical months.
What do they actually provide by way of support?
Support can cover a range of services including initial training, accountancy packages and advice, national and local advertising, new product and system updates, telephone support and ongoing training. Many franchisors hold annual franchise conferences and franchise owner associations to build moral and give franchise owners the opportunity to share their stories and advise one another. Helping franchise owners become and stay successful brings additional success to the company and the brand. Ultimately, exceptional support breeds happiness and success for everyone involved.
What is their position in the market?
It’s always helpful to know your franchise of interests position within the market and who its competitors are. A well-positioned business is closely aligned to the needs of its target customer base, both current and emerging. Companies which anticipate and shape market trends have the best opportunity for long-term prosperity.
Are projected cash flows realistic?
You don’t need to be a financial expert you just need to understand the essential things. How long will it take you to recover your investment and how quickly will the franchise realistically and reliably get into profit? This is a crucial indicator and one which you must understand and be assured that it is acceptable and achievable before you buy any franchise.
How tough is their interview process?
When joining a franchise you need to figure out if the business and people within the company are the right fit for you, but with the same token the franchisor is going to make sure you are the right candidate for their network.
The interviewing process shouldn’t be too easy. Some franchisors are just interested in the financial benefits of recruiting new franchise owners so may take on inadequate candidates.
You want to join a franchisor who is recruiting suitable franchise owners and who is genuinely dedicated to continuing the success of its reputable network
Remember, you need to be happy with the results of your research before entering into any agreement.
Once you have quizzed the franchisor and are ready to take the next step to becoming a franchise owner, click here for our How to…secure franchise funding feature.
Written by Tiffany Brooking