If you’ve ever thought of running a business, but lack the financial or business acumen to start one up, then investing in a franchise could well be the answer. But, before you commit to anything, you’ll need to know the ins-and-outs of running a franchise, in order to make it a success.
What are the benefits?
With a franchise, you get to operate a business that’s already up and running, with a brand name that people recognise and trust. It takes away a lot of hassle, time, money and uncertainty that comes with starting a business up from scratch. Many new businesses fail within the first year of operation, often because not enough research was done with regards to demand, location, price, etc. But, with a franchise, this has already been done for you. You get to follow an established plan of how the business operates and an existing customer base.
Working for a franchise group allows business continuity within the brand, if you decide to go away on holiday or need time off due to illness. Being part of a franchise model, you gain access to a network of people within the group who can give you the support you need to manage the business. Whilst still having control over the shop, you don’t have to worry about some of the nitty gritty aspects of the business. As part of a group, you also have access to unified communications, which increases efficiencies across the network, so you’re all working together for the same goal.
What are the pitfalls?
If opening a franchise sounds easy, then it’s worth noting that you’ll still need to take a lot of things into consideration beforehand. It’s hard work, and requires investing time into the operation, in order for it to succeed. Success isn’t guaranteed in any franchise, so make sure you know what you’re letting yourself in for.
Speak to other people who already run a franchise, particularly with the brand you’re considering. Get the low-down on what it’s really like. Do your research on the company and how they plan to operate in the future. Have a look on the British Franchise Association (BFA) website. The website lists all franchise models, which have been vetted, so you at least know you’re buying into something legitimate.
Terms, conditions and costs
You’ll need to stump up some cash in order to run a franchise, so if you haven’t got any of your own savings, then speak to a bank that deals with business loans for franchise operations. Costs can vary enormously so, again, make sure you know what you’re getting into. You’ll then have to buy supplies from the franchisor, who’ll also take a cut of your earnings.
Get a franchise solicitor to go through all the terms and conditions that are set out on the franchise contract. It’s vital you understand everything that’s expected of you, in order to avoid any misunderstandings and disillusionment, as terms can vary hugely. Importantly, make sure you get the support you need from within the franchise group.
Many franchises fail because the owner doesn’t get on with the arrangements of running the business. If the terms are rigid, then you’ll have to follow them strictly, leaving little leeway to run the business how you’d like to. If this level of control doesn’t suit you, then owning a franchise might not be for you.
Image Credit: Coolcaesar at the English language Wikipedia [GFDL (www.gnu.org/copyleft/fdl.html) or CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0/)], via Wikimedia Commons
- The Pros & Cons of Investing in a Franchise (blogs.lawyers.com)
- Be a successful franchisee (entrepblog.com)
- Franchisers : How To Use Social Media To Your Advantage (dreamgrow.com)
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