I am interested in running a particular franchise, but am nervous about taking the plunge. How can I found out more information about the franchise and get all the information I need before I take the plunge?
The fact that you have asked this question is very comforting. It is always vital to do as much research as possible on any business investment (franchise or not). On a general basis, the first thing to do is check the bfa website it lists all the members of the British Franchise Association. Now this membership is not a guarantee, but what it does give you is a certain amount of peace of mind. All members of the bfa have had to go through a rigorous accreditation, looking at their finances, structure, offering, marketing, current franchisees – it’s all done to establish if the business is a proper business format franchise set up in an ethical and proper fashion. This helps to protect both the franchisor and the franchisee – making sure it is something that you can earn money from, amongst many other things.
As the membership is voluntary, it means that those who have passed and are members, have chosen to be tested. This means that those who aren’t members will include both those who haven’t passed our standards and those who have not been tested. Because of this, if you are talking to a company who isn’t a member, ask why. You will also have to go that extra step in researching them – such as failure rates (it’s not necessarily bad that franchisees have failed, the important information is why).
There are a few ways of getting more information (outside of the obvious route of speaking to the franchisor themselves). Are there franchisees in the network you can talk to (ideally a few) to get a real and balance view of the company, its support, training, earning potential etc? You also want to see the franchise agreement. This should be a substantial document, ideally put together by a bfa accredited solicitor, who understand the intricacies of franchising. Either way, make sure you have any contracts looked over by a franchise solicitor before you sign.
Bank are also useful for information. NatWest/RBS, HSBC and Lloyds TSB are the only bfa recognised banks, as they have dedicated franchise teams, who specialise in the field. They can provide a lot more information, advice and support as a result. They are also very well informed on the franchise industry and will have a fair idea of the good, the bad and the indifferent. A bank would not tell you a business is bad, but if you have a good business plan, but no one will provided finance because of the network you are looking to invest into, it may tell you something – on the reverse, if you are welcomed in with open arms, then this could be very positive.
Without writing a book, I hope this gives you a good start. The bfa also has some educational one day seminars coming up on this very soon, which may be worth looking at on our site. However, in the meantime, I hope this information helps.