There are many business-minded entrepreneurs out there who want to buy a franchise. The industry comprises 48,600 business units, employs 710,000 people and generated £17 billion in 2018. Six in 10 franchise units turn over more than £250,000 and four in 10 can be operated from home (BFA/NatWest).
In short, becoming a franchisee enables investors to be business owners without having to set up a brand from scratch and risk financial instability with a brand-new business model. So, it’s no surprise that running a franchise tops the priority list for savvy entrepreneurs all across the world.
However, it’s not as simple as becoming a franchisee and turning a profit a few months later. If you’re to succeed, you’ll need to make sure you are capable of running your own business and that the franchise you choose is suitable. The only way you can do this is to perform comprehensive due diligence before you make your decision.
As Jerry Baldwin, Co-Founder of Starbucks says: “It really helps if you are doing something you love instead of something you are just spending a bunch of money on. You can become very discouraged if you’re not involved in something genuine, something that you believe in and are committed to.”
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Don’t apologise for thorough research
A franchise agreement is a legally binding document, so it's not easy to get out of once you’ve signed on the dotted line. You’ll need to ask plenty of questions and carefully consider their answers if you’re to make an informed decision.
Don’t be concerned if you think you’re contacting the franchisor with a lot of queries; it’s in their best interests that you’re completely happy with the opportunity. This is because their business could be at risk if it takes on an entrepreneur who isn’t committed to the brand or capable of bringing a franchise unit to profitability. A franchisor is only successful if their franchisees succeed, so they should be glad to answer any questions that you have so you can work out whether it’s the right opportunity for you.
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50 franchise questions
To get you started, here are our 50 questions to ask before you buy a franchise. When you know the answers to them, you’ll be able to work out whether you’re the right fit for the company and ready to make your move if you are.
1. What are my strengths and weaknesses?
2. What am I passionate about?
3. How much can I afford to invest?
4. How much income do I need to support my lifestyle?
About the business
5. How long has the business been franchised?
6. How did the business start and how long was it established before it became a franchise network?
7. Who founded the franchise?
8. What is their background, experience and skillset?
9. Who owns the intellectual property?
10. What are the long-term plans for the franchise?
11. What sets you apart from your competitors?
12. How much working capital is needed as part of the total franchise investment?
13. How many other franchise locations are there?
14. What is the success rate of franchisees?
15. What percentage of franchisees renew their franchise agreement?
16. Are you a member of the British Franchise Association?
About the training and support
17. What does the initial training involve?
18. Is the cost of the initial training included in the franchise fee?
19. What support will I receive on a day-to-day basis?
20. Are there opportunities to receive regular, ongoing training?
21. What marketing support is provided?
22. Are franchisees encouraged to meet regularly as part of a more extensive support network?
23. How do you support underperforming franchises?
About the franchise agreement
24. How long is a franchise term?
25. Will my territory be protected?
26. How do you resolve disagreements or disputes?
27. What happens if my business is not performing as expected?
28. How do I sell my business?
About the franchise operations
29. What will a typical day be like for me as a franchisee?
30. What is the most significant challenge that most franchisees face?
31. Will I have any control over marketing and supplier decisions?
32. Will I get support with employee recruitment and training?
33. Are there any benchmark targets in place that need to be achieved?
34. Is the operations manual up to date and accessible?
35. Are there templates available for local marketing activity?
About site selection
36. Who is responsible for finding a location for the franchise?
37. What criteria are used to find the right location?
38. Do you negotiate the lease on my behalf?
39. Will you manage the refurbishment and fit out of the site?
40. How often am I obliged to refurbish or update my franchise?
About the franchisee recruitment process
41. What attributes are you looking for in a franchisee?
42. What makes a successful franchisee?
43. Will I get a chance to meet with the support team before signing the franchise agreement?
About other franchisees
44. Can I meet with existing franchisees from within the network?
Then, ask existing franchisees:
45. Are you satisfied with the level of training and support you receive?
46. How does the franchisor deal with conflict?
47. How long did it take you to make a profit?
48. How many hours do you dedicate to your business?
49. If you had the chance, would you buy the franchise again?
50. Can I visit your franchise and shadow you for the day?
Why is it important to ask these questions?
The answers to these questions should help you narrow down the franchise opportunities that you’re suited to. You don’t necessarily need previous experience or passion for the industry you’re investing in, but having these attributes can help you see success faster.
Only you can answer the first set of questions about your suitability to become a franchisee. There are over 900 franchise brands operating in the UK, so it’s essential you work out whether franchising is right for you and which franchise brands you should approach.
For this reason, it's a good idea to perform a self-assessment before you approach any franchisors. This way you can continue on your franchising journey confident in the knowledge that you have what it takes to be a franchisee.
When it comes to finances, it’s vital you consider the total amount you’ll need to invest, rather than just looking at the franchise fee. Some franchises require significant set-up costs to get the business off the ground, so you’ll need to be able to finance this and make sure you have enough to keep the business afloat over the first few months. For this reason, don’t forget to save sufficient working capital and money for ongoing fees too.
Finally, running a profitable franchise is a great ambition to have, but if this damages your work-life balance, you may end up resenting your business. That’s why it’s so important to find a franchise that offers the whole package. The right one will generate a healthy income and require the level of dedication and commitment that you’re willing to sacrifice.
Talking to other franchisees
Meeting with existing franchisees to ask franchise questions can be incredibly helpful when you’re trying to build up a picture of a business. If the franchisor tries to stop you talking to their franchisees or select who you speak to, proceed with caution – they may have something to hide.
A good franchisor will understand that buying a franchise is a huge decision, and should allow – and encourage – you to meet with existing franchisees within the network before you commit. Any franchisor worth their salt will be interested in making sure you’re the right person to represent their brand, not tricking you into opening up a new franchise unit.
Take your time when talking to franchisees and keep asking questions until you are confident the franchise suits your requirements and working style.
Finding a franchise
You should do as much research as you need to before you feel comfortable taking the step to becoming a franchisee. This might involve scouring online franchise websites, tracking down industry high-flyers and chatting to existing franchisees. However, here are a few resources you could use to kick off your research journey:
- Take a look at the British Franchise Association’s Franchisor Directory. The BFA only works with franchises that are “proven, protected, ethical, sustainable and free of ambiguity”, so you can rest assured you’ll only see top-quality businesses.
- Here at Point Franchise, we have a number of articles that explain how to buy a franchise and highlight potential issues to look out for. Why not start with Becoming a Franchisee?
- You can also browse an extensive list of franchises that are currently looking for new franchisees on our UK franchise directory. On our website, you can filter by industry, investment price and popularity, so you’ll be able to find great options at the click of a button.
Alice Tuffery, Point Franchise ©