Franchising could be the ideal solution if you have never run a business before and have no business experience.
It is a quick and easy way of going into business with support, advice and a proven track record from an established franchisor and business model.
The franchisor usually supplies the products and trains you on how they operate a service business, so that you can sell the goods or services to your customers. Most franchises have either a weekly or monthly franchise, or a royalty fee, usually based on turnover. The franchisor may also require you to buy materials from them, which is classed as another income stream for them.
This option is not ideal if you want to get rich quick or if you prefer an independent approach to business.
If you do make a profit, it will usually be at a low rate. There may also be a number of policies and additional documents introduced that were not included in the initial price.
The following are areas to consider to help you identify whether franchising is for you.
Going down the franchise route can appear the easier option simply because the business procedures have been tried and tested. However, there is often almost no flexibility as to how this business will be run. You will receive ongoing training and support, and you will be a part of a larger entity, which also has its advantages.
You will need specialist advice and guidance, premises and staffing, along with the cost of purchasing the franchise. Have you put finances away for any hidden costs?
How will you fund it?
Do you have savings? Are you considering a loan? What impact
would there be on your business and personal life if starting the business takes longer than you foresaw to get off the ground? Do you have a plan B?
Ensure you conduct in-depth research into the type of franchise that you would like to purchase. Do market research to ensure you are not solely reliant on the marketing figures given by the franchisor. Conduct your own due diligence into the type of franchise you would like to purchase.
Attend meetings and training days to capitalise on the information shared. Speak to other franchisees and visit their premises.
Complete a business plan and cash-flow forecast. You need to be sure that you have planned for any eventuality.
You might identify a suitable location, but the franchisor may need to approve your decision. Remember to have a clear short, medium and long-term plan in place before starting your business.
If you want to negotiate the contents of the contract, seek the services of a legal expert.
Have you thought through the operational side of the business? Staffing, health and safety, insurance policies, accounting and continual training for you and your staff are a few of the operational realities to consider.
A clear marketing strategy will be the key for the development and long-term focus for your business. Also consider a strategic social media plan as this can be an essential tool for your business. Remember that time spent developing your customer base
will be a crucial ingredient for long-term success.
Before making a final decision on the franchise, get as much advice as possible. This includes talking to other franchisees, franchisors, an accountant, the bank and a lawyer. You should also weigh up several franchise options before making a final decision.