By Trevor Pearson
Trevor Pearson from Ipswich is a certified accountant with an MBA and over 18 years experience as a finance director. When his last employer’s firm became publicly listed, Trevor took the opportunity to make a change and bought Accounts Assist Ipswich — a bookkeeping and management accountancy franchise. He shares his advice with Fresh Business Thinking.
Franchising can be a good way to become self employed whist eliminating much of the risk and uncertainly usually involved in starting up your own business. By choosing a franchisor with a good track record, you are using a tried and tested model and studies have shown that a very small percentage of franchisees fail compared to a large number of new start up businesses. However, as with all business ventures, hard work and dedication is still required and you can’t expect to get rich overnight.
Before starting out on your franchisee venture, you need to do your homework and consider the following points.
• Firstly, evaluate your skills and also your personal needs. Franchising offers a great opportunity to begin working in an area you have no experience in, but this will require more time in terms of research into the new business sector and possibly training than if you go into a business sector that you are already familiar with. You also need to think about what you are good at, and build upon these skills. If you hate dealing with the public, for example, then don’t choose a job that requires this. Also think about your personal circumstances, if you have children you might not want to, or be able to, work late at night or at the weekends. So be very careful to choose a job that fits your needs and also your skills.
• Research the market you are interested in moving into. Find out exactly what the business does and what its market is. Trade associations are a useful starting point for gathering this information as is the internet.
• Make sure you choose a reputable franchisor. Start by checking that they are registered with the British Franchise Association (BFA). Of course, this does not eliminate all risk and ensure you immediate success but it does mean that they have been evaluated independently by a code of ethical franchising. Of course, not all companies belong to the BFA and if they are not a member it is not always a bad sign but do take extra care when dealing with these companies.
• Research your franchisor. Find out his or her background and to get an overview of the company and to see how it operates, ask to see the accounts. Find out how the business has grown and take a look at the financial predictions and then make some calculations of your own to make sure they tally with those of the franchisor. Don’t forget to make sure that the company is capable of meeting your expectations and promises in terms of training budgets, marketing and advertising. If you can, speak to other franchisees with similar backgrounds to you and try to get some inside information. Also, look to see if they have lost any franchisees, discover what support is available and evaluate the franchise agreement and costs.
• Do your sums and assess your finances. When you set up as a franchisee, you will have to pay an initial fee. Once you are up and running, it is also likely that you will have to continue paying a fee or a percentage of your profits. Therefore, it is essential to evaluate what you can afford to invest and to calculate the returns your company will give.
• Check everything thoroughly. Before you finalise anything, take special care to make sure that everything is above board. Be sure to get advice from professionals such as solicitors, accountants and banks before you make any final agreements.
If you are thinking of being a franchisee it could well bring you the flexibility and profitability, without too much financial risk, that you are looking for. Research well before you start and good luck with your new business venture!
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