How to Identify the Right Franchise Brand for You

How to Identify the Right Franchise Brand for YouWhen looking to buy a franchise, it’s important to properly educate yourself about every aspect of the business so that you can feel certain you’re entering into a brand that is both appropriate for you and reputable. This task can seem daunting when facing 100’s if not 1000’s of franchise options, and without enough information it can be all-to-easy to end up with a raw deal. However, with the right strategy and preparation, you can make informed decisions that will benefit you and your business today and down the line. Here are some tips on how to identify the right franchise opportunity for you.

 

Getting started

Before you even begin looking at what’s out there, educate yourself about the current landscape of franchising from a credible source, such as the British Franchise Association (BFA.) Whether you’re new to the concept or just need updates on recent legal changes and industry trends, BFA offers seminars and educational tools that can give you in-depth information, insights, and industry knowledge to help you make your decisions.

 

Speaking to prospects

An ethical franchisor should have no problem being transparent with you about the development of their business and the challenges they have both overcome and currently face. It’s perfectly normal for a franchisor to ask you to sign a confidentiality agreement first to protect crucial information about the company, and you should feel free (and encouraged) to get a legal advisor to evaluate the agreement before signing.

Things to look out for:

  1. Anyone telling you that their franchise is perfect, and they have made no mistakes
  2. Anyone telling you they can make you rich overnight

A few questions to keep in mind:

  1. How long have you been in franchising?
  2. How many franchised businesses are you running at the moment?
  3. What costs are associated with the franchise, including both opportunity cost and additional capital costs incurred by the franchisees?
  4. What’s included in the cost, and what kind of costs are franchisees expected to incur?
  5. What does their training and development program look like?
  6. How many franchisees have failed and why?
  7. How many franchises have opened in the past 12 months?
  8. What systems do you have for keeping franchisees in touch with you and each other?

 

Speaking to franchisees

In addition to speaking to franchisors, you should speak directly to the franchisees of the brand, as they can verify what the franchisor has told you as well as give you a better picture of the day-to-day experience of an individual location.

The franchisor should provide you with a complete list of all their franchisees and allow you to choose which ones you want to speak to. If they don’t, this could be a red flag.

When choosing who to speak with, aim for as wide a variety as possible to get a more complete picture. Choose both top and bottom performers. Choose some who have just started and some who have been with the franchise for a long time. To understand the full cycle of how the business is run, you need to look into performance at every point.

A few questions to keep in mind:

  1. Why did you choose this franchise?
  2. What support did you receive when you first got started?
  3. Have you received continued support? How so?
  4. How involved is the franchisor at this point? Does he/she visit often?
  5. Did the outcome of your business meet the expectations that were set for you when you initially got involved?
  6. If you had the chance, would you do it all over again?

If the franchisor and franchisee agree to it, you may also want to shadow a franchisee for a day to see the business in action for yourself.

 

Get some expert advice

There are many financial and legal aspects that you’ll need an expert for. Projections can be discussed with a dedicated franchise department at one of the several major banks that support franchising. You will also need legal advice from a solicitor who specializes in franchising. If you’re not sure who to look to for help, check for specialists who have been accredited by the BFA.

 

Making the final decision

Once you feel you have a firm grasp of the operational, financial, and legal aspects of the brand, make sure you revisit the most important part of your decision: is it right for you? Something can be a sound business investment and still not be exactly what you’re looking for.

A few questions to keep in mind:

  1. Is the projected outcome of this deal in line with your professional goals?
  2. How does this business fit in with your personal goals?
  3. Does the reality of the business allow you the hours, work-life balance, and flexibility that your personal life requires?

 

Use everything you’ve learned as a resource for your final decision. Once you know you’re prospect is an ethical, reputable brand with a financially bright future, the final call has to ultimately come from how you feel about it.