Joining a Franchise
Franchising is a proven and successful way to start your own business. Starting any new business can be a challenge for even the most experienced entrepreneurs. Starting your own business through a method of franchising does considerably improve your potential success. It is widely reported that 9 out of 10 new franchisees succeed!
The guide below will help you when looking at potential Franchisors; however, you should always remember, it is only a guide and that our advice is intended to form part of your own due diligence. The AFA does not recommend any particular Franchise over another.
What type of Franchise Business should I choose?
One of the obvious points to consider here is your suitability. It is incredibly important to understand that you are considering a business, and that you are not simply buying a job!
- Where do your existing skills lie?
- Do you favour a particular sector?
- Have you a natural affinity towards a particular type of business? A hobby perhaps, that you have a passion for?
- Do you have the aspirations of a particular type of business, and more importantly, the required ability? Aspiration + Ability = A Good Start
Can I afford it?
Only you know the answer to this question. It is important that you fully understand all of the costs involved. There can be costs, other than the initial investment and it is important that you determine the full scope of these before you make any decisions. Ask about the expected Working Capital that you might need, stock, services, license fees, etc. Ensure that you are fully aware.
Is the Franchisor a Member of the AFA?
AFA Members are required to complete the accreditation process before they can become a Member; this ensures that franchisor Members declare that they operate in an ethical way. It’s important to fully understand why your chosen franchisor has opted not to join the AFA.
Within the United Kingdom, there are two Franchise Associations so we would always recommend that you further your research and look at www.theBFA.org.
What type of questions should I ask?
The obvious answer is that there is no wrong question. (Often said, but very true!)
Franchisors want you to make an informed decision.
If you are new to business it can sometimes be difficult, so to give you an idea of the type of general questions to ask, we have listed some below:
- What is the term (length) of the Franchise Agreement?
- Can my term be renewed; is there a charge for this?
- What are the License Fees and how are they calculated?
- When was the company founded?
- How many franchisees do they currently have? What are their targets?
- Can I speak with some of the existing Franchisees?
- What does the training entail?
- How will you be supported throughout the term?
- What is the failure rate and what happens if you fail?
- What can I realistically earn?
- What is the return on my investment?
- What are my expected profits (Gross and Net)?
- What are my anticipated expenses?
Remember:
Effort = Reward
As with most things, the more you put in the more you get out!
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