In the current economic climate starting abusiness can seem like a risky proposition, especially if this issomething that has not been done before. The benefits of franchisingare that an existing business model with brand recognition alreadyexists, and that support and guidance are offered. Here are ten top tips on what you must consider before you move into franchising:
1. Make sure the franchise is a member of the British Franchise Association (www.thebfa.org [1]). The association also has innumerable resources that are very useful to any potential franchisee and it will ensure you are getting involved with a reputable business.
2. Check whether the business is a proven concept. Getting in on the ground floor of a new venture may be very exciting, but it is also incredibly risky and this is not the kind of uncertainty that most people will be looking for.
3. Speak to individual franchisees. This is really important. It will tell you how well the business is received, what the major challenges are and how supportive the franchise owners are. These are all questions that need to be asked and the answers will help form an accurate opinion of the business as a whole.
4. Get a handle on the start up costs and the ongoing fees. These differ dramatically from one franchise to the next and will have a significant impact on any profits.
5. Spend time with the bank and make sure they understand how the franchise works, how the business operates and what sort of support they will be expected to deliver. Without such support and understanding, it is very easy to run aground, even though the business may be perfectly viable.
6. Be realistic about your ambitions. By all means be ambitious, but temper that with some realism and do not expect to become a millionaire overnight.
7. Secure, keep and grow the business's customer base. This takes time and effort. It will require the franchisee to get out and bang the drum for their business in the local area. Those who have found difficulty in selling and marketing in the past may find it comes a lot more easily when the business in question is their own.
8. Remember, the customer really is king. If customers prove awkward or difficult then killing them with kindness is a better approach than showing them the door.
9. Don't try to alter the original concept. Of course businesses have to evolve, but the worry is that by moving away from a successful model, franchisees actually end up creating problems for themselves.
10. Don't try to expand too fast. Some franchisees are too keen to expand their operations and can be tempted into taking on too much borrowing, which ultimately stifles the business rather than encouraging further growth.