The process of buying a franchise

24/07/2018 17:00 | Start a business

Process of buying a franchise

Buying a franchise is a significant commitment and one that you should enter into well informed and aware of what will be expected of you. If you've chosen the franchising route instead of starting your own business because you think youre guaranteed to be a success, then you need to be prepared to be disappointed.

Although there are many benefits to buying a franchise, youll still need to work hard, have determination and be dedicated to making your business a profitable one if you want to succeed.

Before you sign the franchise agreement, you should follow this simple process to make sure that youre making the right decision.

Step one: Establish if franchising is right for you

The franchise business model doesn't suit everyone, so it's vital that you perform a self-evaluation early on so that you don't waste your time pursuing a career that isn't right for you. Remember, that the franchise agreement is a legal document. Once this is signed, you'll be obligated, by contract, to run your business according to the franchisors proven system.

Ask yourself some fundamental questions to understand if you have the attributes required to be a successful franchisee:

  • Are you happy to follow someone else's rules to maintain consistency of the brand?
  • Are you willing to accept that the franchisor may not approve any changes and improvements that you suggest for your franchise?
  • Are you prepared to learn from the franchisor and accept their advice and guidance when its given?

If the answer to all three of these questions is yes, then youre well on your way to becoming an ideal franchisee.

If, however, you struggle to adhere to rules, have a strong entrepreneurial spirit or just have a desire to do things your way, then franchising may not be for you.

A franchise system aims to ensure that franchisees operate consistently from one location to the next. If you consider yourself to be a true entrepreneur who likes to make their own decisions and be in full control, then starting an independent business from scratch may be a better route for you to take.

Step two: Find a number of franchises that suit your needs.

With over 900 franchised brands currently operating in the UK, when it comes to choosing the right franchise, youre spoilt for choice. Start by making a list of brands or industries that interest you. You've essentially got a blank canvas, and you can decide what picture you paint. You can choose a brand you're passionate about, or an industry that you think suits your skill set, your options are almost endless.

At this stage, dont let things like the cost of the franchise fee or the percentage of the ongoing royalty fee cloud your judgement. Yes, you want to find a franchise that enables you to achieve a good income and that provides a positive return on your investment, but this shouldnt be the only reason for choosing a franchise.

You don't have to love what you do to run a successful franchise, but it does help. If you've selected an opportunity to invest in purely based on whether you can afford the franchise fee, then you may find it hard to remain motivated in the long-run. This could mean that youll struggle to become profitable even if the franchise fee is one of the most affordable you can find.

When youve short-listed the franchises that appeal to you, the detailed work can begin.

Step three: Evaluate each franchise opportunity.

Now is the time to start your due diligence into each franchise on your list. You can only be completely confident when buying a franchise if youve thoroughly researched each opportunity. Here are some critical steps you should take when performing your due diligence.

Check out the franchise websites

Most franchises have separate web pages to their main customer-facing website that consists of all the critical information about the franchise opportunities on offer. This information can be very valuable when comparing one franchise to another. You'll also be able to request a franchise brochure or register your interest via the website so that a member of the recruitment team can get in touch with you.

Attend a Discovery Day

If the initial conversations with representatives from the franchise go well, its likely that youll be invited to attend a Discovery Day. This is usually held at the franchise's head office and gives you a chance to meet with the franchisor and find out more about the franchise opportunity. The franchisor will undoubtedly be evaluating you, but you should also use the Discovery Day to decide if youre a good fit for the franchise culture. From meeting with the franchisor and their senior team, you should get a sense of whether you could work as part of the franchise.

Speak to existing franchisees

An essential part of your due diligence is to speak with existing franchisees from within the network that you're considering. Ask the franchisor for the contact details of all franchisees so that you can start your research. If the franchisor refuses to give you this information or tries to select the franchisees that you speak to, this should serve as a warning sign. It's in the franchisor's best interests for you to discuss the opportunity with other franchisees as they can then be confident that you're making a fully informed decision about becoming part of their business.

Step four: Consult franchise professionals

Once you've evaluated several franchise options and you're happy that you've found one that is a good fit for you, the next step is to consult an experienced franchise solicitor. It's crucial that your chosen solicitor specialises in franchising as most general legal advisors will not have the required know-how you need.

A franchise solicitor will help you to fully understand and negotiate changes to the franchise agreement if indeed changes are possible. It's essential that you understand everything in the agreement before you sign. Franchise agreements are legally binding contracts which can be challenging to get out of if you have a change of heart after signing on the dotted line.

The process of buying a franchise takes time and effort to ensure that the right decision is made. Don't cut corners to speed things up as you could end up regretting this further on down the line.

These articles may interest you
Did you enjoy this article? Please rate this article
Be the first to rate this article


post a comment

Characters remaining: 250