Introduction
Net
Lawman provide a number of articles on franchising. The first focuses on franchising in
general, what it is and how it works.
Each of the other focuses on a specific issue such as legal matters. Links to these articles are at the end
of this one.
This article will be useful reading for anyone thinking about
buying a franchise as well as business owners who want to franchise their
business.
When considering whether to buy a franchise, or even which to
buy, you should think about you as well as the franchise. The franchise you choose should reflect
your skills and experiences. Franchising doesn’t suit everyone because it
requires a willingness to want to work in someone else’s system without
requiring change. It requires management capability, dedication, and the ability
to abide by guidelines. It does not require a technical understanding of the
business – so much so that in some areas, a technical background is viewed
negatively. For example, it would be blasphemy in the eyes of a chef to run a
fast food outlet.
First we consider your attributes, and then we consider which
franchises fit with each personality.
Your experience
First, identify your skills and experience. For example, if you have worked in
coffee shops most of your life, you are likely to know how they run and what
makes the customers tick. You will have customer service skills and could
therefore consider any food and beverage outlets. However, if you have worked as a
computer coder, you may be better suited (of course this is a generalisation) to
something else. Have you managed
staff before? Have you been involved in administration? Most franchise systems
require much paperwork and ‘after hours’ work, so this skill is
essential.
Where would you like to work?
- In a
retail shop?
- In an
office?
- On your
own?
- What do you enjoy doing?
- Talking
on the phone
- Send
emailing messages
- Working
with your hands on practical tasks
- Driving
You should also be aware of:
· The financial commitments you have and the amount of money you
are able to spare. Starting a franchise carries less risk than starting on your
own but that’s not to say it’s a “sure thing”. Additionally, cash flow can be low in
the first few months so consider whether you have enough back up money. If you
need to postpone for 6 months, do so.
·
Can your
partner support you – we ask this on a financial and emotional level. You will
both have concerns and issues and of course you must be prepared to share them
and the success.
·
How is
your family life? Would it matter if you had to come home and complete paperwork
until 9pm? What about if you had to start work early in the morning?
·
How many
extra hours are you prepared to put in? At the beginning, the franchise will
need much input by you. You could
of course employ someone to manage it at a later date but at the start, it will
require your blood.
·
Do you
want to “run your own show” If so, maybe franchising is not for you. You will
have strict guidelines to follow and you will be told how best to run the
business.
·
How much
support do you need? How much support will the franchisor give you? If you need
more, but the franchisor wants to give less, you may come
‘unstuck’.
·
How are
you with doing the dirty work yourself?
·
Have you
had frequent changes in jobs? If yes, are you sure that franchising is something
you really want to commit yourself to and that you aren't just looking for yet
another change? On the other hand, if you haven't moved jobs a few times in your
career, are you sure that you are suited to the different lifestyle, which you
may face?
·
What are
your feelings on job security? Some people like a lot of job security, whilst
for others this is not important.
The franchise for you
Research the market
Speak to trade associations for the business type to find out
more about the market. Use the Internet to research the business. Understand
what that business actually does and the market in which it operates and don’t
just be blinded about “your own business”. Additionally, consider the economy
and the ‘elasticity’ of the goods. If the economy is booming, electrical goods,
and products at a health retreat may sell well. However, as soon as the market
drops, people will have less money to spend on the latest widescreen television
or deluxe pedicures. Can you survive? Food on the other hand, will always sell –
demand is inelastic, meaning that people will always need it, no matter if they
are rich or poor.
Research the franchise
Speak to current franchisees. It is often set up so that you will do
this without having to arrange it yourself. Of course not every franchisee will want
to talk to you, but try to find a few a) outside those provided to you and b)
some with similar backgrounds other than the ones you are given. Research the
franchisor too – they will be researching you! What is his background? How has
the business grown? Have they lost any franchisees? Evaluate the support, the
value in the costs and the nature of the agreement.
Be sure
Take your time. Make sure that the short listed companies have
been compared against a standard benchmark. Seek advice from friends and relatives as
well as professional advice from banks, solicitors and accountants. If you are
unsure then you haven’t researched enough.
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