There are many issues to consider before becoming a franchise owner. Robert Toth, franchise partner,
Wisewoulds Lawyers, has pulled together a basic checklist to assist you in assessing whether franchising, and the franchise you have identified, is right for you.
1. Will it be financially viable?
- Plan in advance, make sure you can get a return from your effort i.e. draw a wage and a return on your investment not just one or the other!
- Ask for financials from the franchisor. If you can't get financials, prepare your own financial projections and have the franchisor review it
- Use the services of your accountant totest your financials and assumption
2. Is it what you want to do long term?
- Picture yourself dong it in 12 months time – can you see yourself with the same level of enthusiasm?
- What impact will the business have on you and your family financially, emotionally and in terms of demands on your time?
3. Understand - What you may be launching into
- Talk to other franchise owners
- Are you suited to being a franchise owner and to be accountable to someone else?
4. Review all aspects of the business- Check out the good, bad and ugly. Do your Due Diligence on the franchisor and their team, just like they do with you
- Ask to meet the operational and support manager who would be supporting your as a franchise owner
5. Read all of the documents, including the fine print and between the lines
- Talk to a specialist franchise Lawyer and an experienced franchise accountant – not your local solicitor
6. Research the business - How does it compare to others?
- Look at the competitors – who does it better?
- Is there an opportunity to grow the business itself or grow in the system?
7. Accept
- That you may only get a return on your effort and investment over the term of your
franchise agreement 8. Plan your business
- Prepare a detailed business plan – use your advisors
- Plan for the expected and unexpected
- Make sure you have the financebefore you begin negotiations
- Make sure you have sufficient working capital
9. Talk to - Your family, friends and advisors. They will all give you feedback and help you make an informed decision
10. Think again – Is this right for me?
- Get it right from the start, as a wrong decision can be costly
A good franchise should have: - Quality products and services with longevity (no passing fads)
- Strong well-known public image –growing in the market
- Professional management
- Ability to duplicate success
- Ability to create profits
- Opportunity to grow and create financial strength
- The ingredients to make it successful for you
A good franchisor should be:
- Well established and financially secure
- Experienced in business and management
- Effective in communication
- Willing to train, assist and be there
- Entrepreneurial and future orientated
- Undertaking strategic planning
- Member of FCA (preferable)
A good franchise owner should be:
- Willing to accept the franchisor as controller
- Able to manage and accept responsibility
- Motivated and dedicated to hard work
- Have sufficient financial standing and back-up
- Be team orientated and not an individual or loner
- Going in for the 'right' reasons
- People orientated and communicative
Is the business suitable to be franchised?
- Operating in the market as company owned stores for at least 2 to 3 years
- Operating profitably
- Provide 'good' products and services
- Has longevity - is not a "fad"
- Unique business and difficult to imitate
- Standardised operations and systems in place
- Duplicated by teaching it to others
- Well known 'name' in the industry
20-Aug-2007