Business Guidance

How To Start Your Own Franchise

By Tom Endean, Marketing Manager at British Franchise Association (bfa)

The first point of call for anyone looking to research franchising, is the bfa website (www.thebfa.org). It provides objective advice, various resources and listings of bfa accredited franchises. This way you can start by looking at and speaking to those businesses that have passed the stringent accreditation processes of the bfa. However, don't just go for the first business you see; visit exhibitions, attend educational seminars, read the franchising magazines that you can get in most large newsagents. All of these will give you a sound and informed platform for you to make a decision about whether you are right for franchising and franchising is right for you.

If you are at the stage where you know you want to join a franchise, but just want to gather some more information before going any further, then look to speak to existing franchisees in that network. This will give you a realistic view of what it is like and what the day to day running of the business involves. It is also a good idea to speak to only the bfa accredited banks about finance and accredited solicitors about the legal documents involved. This all helps provide you with more information and support to make your decision.

Although franchises remain inherently more successful than their non-franchise counterparts, the banks or financial institutions will also view franchising as a safer more attractive investment. As a result, you are more likely to secure funding on a franchise than if you were trying to start up a small business from scratch because it is a proven business model. This attractive package naturally becomes a serious consideration for many individuals looking to start up a business, especially at a time when the number on the unemployment register is on the increase.

With this in mind, it is understandable that many would believe the idea of a franchise to be a quick and easy solution to a redundancy situation. But it is vital that the possibility of a franchise is taken seriously. Franchising is not a quick-fix solution nor is it a part-time hobby. Today franchising encompasses a whole multitude of business disciplines and markets. It is a serious business option and one that requires hard work, bags of enthusiasm, dedication and business acumen. That is not to say that there isn't a suitable franchise business out there for everyone, but you do need to choose very carefully and with extreme caution.

The bfa suggests some steps that should be taken when embarking on the possibility of a franchise investment:

Finances
Do your sums and find out realistically what funding you have available or potentially available. If you are looking to raise finance it is worth noting that there are three major banks that the bfa accredits because they understand and specialise in franchising. Ask to speak to a specialist franchise department or advisor. By speaking to a bank that is familiar with lending on franchise investments, you are more likely to secure the funding you need.

Lifestyle hurdles
Ask the question "Do I fit this business model?" For example, if you are looking to invest in a restaurant, are you able to work nights and weekends? If you are investing in a cleaning business, it will be difficult if you have an adverse reaction to certain chemicals. It sounds logical, but be sure of the chosen field. Those franchises that succeed tend to be those with close family and friends around them who are willing to provide help and support.

Do your research
Market research is vital, take time to look at the different types of business models available to you, because there are so many out there. Keep an open mind about what industry sector you are interested in rather than simply choosing a business sector that you understand or have experience in. Be aware that when you sign up to any franchise you are buying someone else's brand and they will want you to adhere to their systems and methodologies. It may be that a completely new area suits you much better as a new challenge also means no preconceived ideas.

Honesty is best
Make sure that you thoroughly investigate any franchise opportunity that you are seriously considering. Look further into the franchise and get as much information as possible. The franchisor should be transparent about success, where in the country it has performed well and also where it hasn't. Ask to speak to a number of other franchisees not just the one the franchisor recommends, they should be open and honest enough to allow you to speak to any one of their franchisees to ensure you get the information you need to make an informed decision. If the franchisor is a bfa member, you will already have a certain level of assurance that the business is independently measured against an ethical code of franchising practice.

Beware of all costs
Make sure that the franchise investment includes the cost of operating capital and stock, or at least if it doesn't, that you are aware of it. The last thing you need is surprise bills and other charges cropping up. This is really about doing your own due-diligence.

Not a quick-win!
Although franchises are generally more successful than other business[b] types, it is by no means a license to print money. It takes a considerable amount of hard work and determination, but preparation is key and if you spend the time initially gathering as much information as you can, you will eliminate the possibility of making the wrong investment.

Finally, a good [b]franchise network, run by dedicated, motivated people, does provide the strong platform needed for a success. The ability to operate as a local business with understanding and commitment to the area and people, combined with the national support systems and brand, has allowed many franchises to remain viable, secure and successful businesses.

Why franchising?

The motivations for investing in a franchise are many and varied. From the desire to escape the 9 to 5 routine, be your own boss, improve career prospects and lifestyle, as well as spend more time with family and have a more flexible routine, franchising is seen as a very realistic option for many people who want to start their own business.

There are clear advantages to franchising

 You do not have to come up with an idea - someone else has had it - and tested it too!
 Larger, well established franchise operations will often have national advertising campaigns and solid trading name.
 Good franchisors will offer comprehensive training programmes in all business skills, including sales.
 Good franchisors can also help secure funding for your investment as well as, for example, discounted bulk-buy supplies for outlets when you are in operation.
 You will be in business for yourself but not by yourself - although you run your 'own show' you are part of a much larger organisation and will have the backing of a franchisor support team.

Pros and Cons of Franchising

What are the main advantages of buying a franchise?

A franchise business has a proven business model, which is transferable and can be taught. This is then supported by the franchisor, giving you a much higher chance of success than if you were looking to start a new business from scratch. You also own the business and at the point that you wish to retire or move on you are able to realise your capital investment by selling the business.

You are also the owner of the business and it allows you to exercise your enterprising nature by fully capitalising on this more robust business model. You are also more likely to gain finance for a franchise in the first place as banks recognise the higher levels of success and are therefore more supportive.

What are the main disadvantages of buying a franchise?

The business still requires a lot of hard work and commitment, as it is a still a new business, which needs to become established in the area. This means you need a lifestyle that can support this requirement. On top of this, despite the high success rate, it is still not guaranteed. There is always a risk that the business won't turn out as you would like. You buy into a proven business system for its benefits but you also take on responsibility for following it. If you're someone who has to do things your way, then this may not be for you.