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What to look for in a franchise

Sarah Stowe

When investigating franchise systems with a view to investment there is plenty to compare and consider. There are several steps to getting it right.

Firstly you need to have an affiliation to, connection with or liking for the brand. Without this you will have no ongoing passion for the business.

The next thing to look for is a proven concept. This will be a franchise system with an established track record of success. There are many great examples of this including McDonald’s, Gloria Jean’s Coffees, Sumo Salad, Grill’d, Pack & Send, Fernwood, the list goes on.

Of course there are exceptions to this rule as all of these companies started out as unproven businesses with only one store each; what made the difference is they had unique and strong concepts initiated by good operators.

I would suggest you ensure the franchise system is financially healthy. You can investigate this by examining the audited financial statements in the disclosure documents which franchisors must legally provide to potential franchisees.

Look for a well-known or strong brand; it’s even better when the brand name becomes synonymous with the product or service in the mind of consumers. So if your friends talk of calling Pack & Send rather than just a courier service, then you know that franchise is a winner.

A franchise is only as good as the product it sells or the service it provides, therefore look for top quality and/or proprietary products and services. After all, that’s what keeps the customers coming back. So check out customer feedback online by looking at blogs, and old news clippings. Why not involve friends and family in the research? Ask them to look at the product or service and consider if it is something they do, or would, buy.

A good quality product is essential but even then it is not much use if no one wants to buy it. You need to have a look at trends and government regulations and make sure you are not investing in a dying industry. You want to invest well so you need to look at a franchise system within a vibrant market. Some great examples are coffee, healthy food, health care, services for the ageing population, gaming and electronics, and

environmentally friendly products or services.

If you get a franchise in one of these sectors then you’re securing a demand and customer base for the foreseeable future. So keep an eye open for future trends in your industry of choice.

In many cases franchise success is dependent on real-estate and location so finding the right site and then negotiating a favourable lease is crucially important. Look for a franchise system that will offer a total assistance package, finding the right site for your franchise and that will help in the construction procedure.

Look for a franchisor that provides great training. This should include both operational training in the mechanics of the franchise and general business training in vital skills such as book keeping and marketing. A good quality franchise provides excellent support.

Finding happy customers is an excellent way to find a good franchise system. And what I mean by happy customers is happy franchisees. The best way to find out is by talking to other franchisees. Ask the prospective franchisor for a list of franchisees for you to contact. Ask the franchisees if they have any plans to buy more franchises within their system; ask them if they had their time again would they buy into that franchise system and why; ask them if they are happy with the level of support and training they receive.

The key is to find a good quality, financially robust franchisor with an established brand name, marketing, training, systems and all the backup and resources you need to get started.

Tony Melhem is the FCA deputy chairman, chairman of National Franchisee Forum, founder of Coco Cubano (espresso, chocolate & cocktail bars) and multi-national award winning franchisee.