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What to look for in a start-up franchise

Sarah Stowe

You want to buy a franchise that has plenty of potential for growth, and get in at the start of something exciting.

Buying into a brand new franchise business is a riskier venture than signing up to a franchise that’s been established for years and has a strong reputation in the market. But it’s an exciting opportunity to grow with the business and possibly have a hand in shaping the future.

What’s important before taking the leap into a start-up concept is to understand what the franchisor can provide – and whether these elements are in place.

Here are some ideas to consider

The franchisor can provide standard processes

In the shift to a franchise model the franchisor needs to establish good procedures and systems. Anything operational, whether that’s an accounting system, an operations manual, an ordering system or rostering tools should be standardised, easy to understand and to access.

It’s much easier for the network to grow effectively if there are standard systems and reporting processes from the beginning.

The franchisor should be accessible

This is particularly important if you are the first or second franchisee for a brand new franchise. As franchise chains develop, systems improve, training gets fine-tuned, and there are other franchisees to turn to for advice.

But the risk-taking, ground-breaking franchisees who buy into the vision at an early stage will turn to the franchisor when anything is unclear.

The franchisor can provide resources

Today’s digital world makes it easy to store information and resources in one place for franchisees to access.

What’s available can range from an operations manual, online training program through to marketing material and online communications tools.

Questions to consider

Does the franchisor have proof the model works?

If the business is a brand new concept, that’s a challenge. Most franchise businesses convert existing concepts into a franchise model – ideally after two to three years of trading, in more than one location.

This helps you understand the viability of the model when run by someone other than the founder.

You’ll still need to do your own research on the business potential and the market – always back up what the franchisor tells you with your own independent due diligence.

How will the franchisor fund the business development?

Developing a franchise model can be financially draining, so it’s good to understand how the franchisor plans to fund the growth of the business.

And how will it manage day-to-day elements like marketing?

Does the franchisor’s growth strategy make sense?

How fast does your new franchisor intend to grow its business? Are you confident there will be the support on hand as the franchise adds to franchisee numbers?

Of course a start-up franchise won’t have the same level of support as an established model, but there are benefits to being an early bird in a new franchise concept.