Get Yourself Ready to Invest in a Franchise in 12 Months
If the franchise world appeals to you, but you donít feel ready to become a franchisee just yet, we can help. Below are some steps you can take to be franchisee-ready and take the plunge within one year.
Ask almost anyone and theyíd be keen to turn their hobby into a money-maker. Franchises, in many cases, offer us the opportunity to pursue our passions with minimised risk Ė providing proven and successful business models in the sectors we love.
52% of Brits dream of turning their hobby into a career (Le Cordon Bleu)
You might be considering investing in a franchise, but something is holding you back. It could be fear; career changes and starting your own business can be daunting. It could be finances or skills; you might feel unprepared or not have enough cash available.
However, even if youíve never run a business before, the franchise model means you can often be franchisee-ready in a year, or even a couple of months.
So, what exactly can you do to prepare to invest in a franchise? And how can you achieve it all within 12 months? Hereís our suggestions.
12 months before: The self-evaluation
Before you embark on a franchise journey, make 100% sure the route is for you. Running a franchise is different from running an independent business, meaning itís not the path for every entrepreneur. Research the pros and cons of franchising and the traits of successful franchisees. Set realistic expectations and ask yourself the tough questions first to make sure youíre motivated and up for it.
Good questions to ask yourself when considering a franchise:
- What is my reason for starting a franchise? It is for a lifestyle change, or to meet a lifelong career goal?
- Am I the type of person franchisors look for?
- Am I willing to follow the franchise structure and existing operating methods?
- (Note: Franchisors offer different levels of autonomy. Some might allow you to run the business your way. Others are more hands-on, with specific processes and procedures they want followed.)
- Am I willing to put in the hard work, long hours and lifestyle changes at first?
- Can I handle failure?
- (Franchises offer incredible support that minimise risk and set you up for success. However, mistakes are inevitable and failure is always still a possibility.)
11 months before: The market evaluation
Knowing your personality traits and ambitions helps you select a franchise Ė and franchisor Ė best suited to you. If youíre an introvert, for instance, you might prefer a home-based franchise.
Tools like our UK Franchise Directory are useful starting points to see exactly whatís on offer, and you can search by sector or by investment fee. The bfa is also a trusted resource for researching reputable franchises, since all bfa members are bound to a franchising code of ethical conduct.
Carefully read the detailed descriptions of each franchise that appeals to you. Find out whatís on offer and exactly what you need. Then, go exploring beyond the directories. Look at the businessís website, social media pages and online reputation. Type their name into the search engine to see what kind of news and customer reviews come up. Do as much homework as you can to get a feel for the brand and whether it appeals to you. Remember to write down any questions as you go along Ė youíll need these later.
>> Read more:
- Franchising 101: The Official Franchise Start Up Checklist (Part 1)
- Franchising 101: The Official Franchise Start Up Checklist (Part 2)
- New Year, New Career: No Better Time Than Now to Start a Franchise Today
- Franchising 101: 8 Signs You're Ready to Start a Franchise
- Starting a New Business Doesn't Always Lead to Immediate Success: Here Are 5 Ways to Change That
- It's Never Too Late to Start a New Business
8 Ė 9 months before: The franchisor evaluation
After extensive background checks, make a list of your top five franchise options, with their contact details. Reach out to franchisors and ask about their Discovery Days. Discovery Days are valuable, face-to-face interactions where you can meet with franchisors. Itís a great way for you to ask all your questions, while getting a feel for your franchisorís personality, business style and traits key to success.
Bring your initial questions along, and remember to ask questions that satisfy your expectations. That way, there will be no surprises later. Donít put pressure on yourself to ask all the right questions now; youíll have an opportunity to do this again later in the process, during your interview.
Good questions to ask franchisors at a Discovery Day:
- Whatís your operational model?
- What is the growth plan for this franchise?
- How is this business different from its competition?
- What training and feedback mechanisms do you offer?
- What kind of franchisees are you looking to recruit?
- Can you put me in touch with an existing franchisee?
- (Franchisors work hard to Ďsellí their business on Discovery Days, focusing on the perks. With a contact to talk to, you can verify their claims. If a franchisor is reluctant to give this information, consider it a warning sign.)
6 Ė 7 months before: The franchisee evaluation
Youíve done a lot of homework on different businesses now. But nothing beats getting a first-hand account and talking to people who are in the thick of it. Get in contact with other franchisees Ė either from the industry or specific business youíre interested in. Ask them about their experience, and if they have advice for new franchisees starting out.
Good questions to ask other franchisees:
- Why did you become a franchisee?
- Why does this business appeal to you?
- What is your most / least favourite thing about running this franchise?
- Does this franchise meet your expectations?
- Is there anything you know now that you wish you knew when you started out?
5 months before: The finance evaluation
As you get ready to take the plunge, itís time to get your finances in order. By now, franchisors will have told you exactly how much you need to put down for your first investment. Theyíve also, hopefully, given you a good idea of the other costs involved, such as royalties and running costs.
However, itís worth drawing up your own list of projected costs Ė from overheads to rent. Check you have enough funds to get going. If you donít, set a goal and draw up a budget to help you get there. Start exploring your credit options, whether itís a bank loan or support from family and friends.
Importantly, check your credit score. Franchisors will check this as part of your application, so youíll want to do a health check on it first. Do it well in advance so that, if your rating is poor, you have time to improve it.
There are three credit reference agencies in the UK Ė Equifax, Experian and TransUnion Ė and everyone has the legal right to view their score. Itís worth checking with all three, since you donít know which one your franchisor will use. Fortunately, itís quick and easy to do. And since the new GDPR law came into effect in May 2018, itís free too.
3 Ė 4 months before: Boost your skills
One of the appeals of franchising is that you can start a business without any previous experience or background in that sector. But that doesnít mean you should walk in unprepared. Examine your skills and identify your strengths and weaknesses.
There are three sets of skills to look at when becoming a franchisee:
- Your skills in that particular industry
- Your general business management skills
- Your soft skills
Soft skills are often the most important, since theyíre not industry dependent. They include problem solving, leadership, negotiating, conflict resolution and collaboration.
Identify the most valuable skills for your chosen route. Then use this preparation time to upskill yourself, filling your gaps but also refining the skills you already have. This exercise will put you in a stronger position for your eventual interview with your franchisor, who will assess your personality traits, attributes and abilities.
Remember, however, that you donít need to know or master everything now. Franchising is full of training opportunities. As part of your research, you should have a good understanding of the training and support on offer.
>> Read more:
- How Investing in a Franchise is Worth it
- Franchise Investment: The Good, The Bad and The Ugly
- Invest in a franchise or go it alone?
- 5 reasons to invest in a franchise
- Making your mind up: Top 5 things to consider before you invest in a franchise
- Reasons why you should consider investing in a new franchise system
1 Ė 2 months before: Get ready to commit to franchising
If youíre feeling informed, prepared and ready, now is when youíll start taking the plunge. Your next steps will be to choose your franchise, negotiate the deal, read and sign the paperwork, and then go off to find your location, employees and customers. But thatís a whole other checklist. For now, our focus is one step one: getting you ready to become a franchisee.
While this is a 12-month plan, you can speed up or stretch out the timeline as you like. The goal is simply to give you plenty of time to prepare, so that when you take you first step into franchising, youíre ready.
Feeling ready to start? Hereís our UK Franchise Directory.
Sophie Cole, Point Franchise ©
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