Finding a suitable franchise opportunity

What are franchisors looking for in potential franchise owners and how should prospective franchisees go about choosing a franchise? Garth Allison, UK managing director of FASTSIGNS, reveals all

There are four main areas a franchisor will look at when considering whether an individual is franchisee material and they are: the person’s qualities; their work experience and employment background; their financial capabilities; and their personal situation.

Personal qualities

The qualities of a person or their personality is extremely important, and it isn’t one size fits all.There are many different kinds of franchises out there and a legal profession franchise will be looking for a person with certain characteristics that may be different from a high street retail franchise.

However, there are some common attributes that every franchisee needs to possess - and the first is self motivation. You need to have some get up and go, because the most successful franchisees are those who go the extra mile. Just because it’s a franchise, it doesn’t mean that business is going to necessarily walk in through the door. No franchisor can guarantee success; all they can do is facilitate your success by providing the necessary support. You’re on your own, but not by yourself.

Work experience

In terms of work experience, typically for most franchises you don’t need to have specific prior experience to be able to run one successfully. However, nine times out of ten some knowledge of sales or marketing is useful. Such skills can help you to generate new and repeat business by giving you the ability to build relationships with customers and ‘add value.

Some people are naturally good communicators, but for those who aren’t it can be helpful to have had some kind of customer facing experience.

Financial qualifications

A franchisor should also look at the financial standing of a franchisee candidate. There is nothing to be gained from taking on a franchisee who can’t afford to invest in the business. As with any new company, it can take time to get your franchise up and running and there will be the inevitable pitfalls. Being financially stretched at the outset creates too much additional pressure and can scupper a franchisee’s chances before they’ve made it across the start line.

The key is sound finance and a sound business plan. Banks are very keen on the stability of businesses right now, so your business case has to be solid and you have to be financially qualified to go ahead.

Family life

Last but not least is a prospective franchisee’s personal situation. Is it the right time to set up a business? Can you commit the time and resources necessary for a new business? The full support of your family or partner is crucial. Many thriving franchises are family concerns, so don’t overlook the possibility of bringing in family members as employees.

The first part of your journey as a potential franchisee is to find out what franchise is right for you. Ask yourself the following questions to help you match your personality and skills set with what’s available. Write down the answers on one side of a piece of paper and then write a list of franchises that tick all (or most) of the boxes on the opposite side. You will then have a good starting point from which to continue your research.

Do you want:

* A fast or slow-paced environment?

* To work from home? If the answer is no, you are left with a clear choice - a mobile franchise or premises-based business.

* To have staff? Do you have the desire or skills to manage people? If you want or need to take regular time out, perhaps if you have a young family, you may wish to choose a franchise that involves running a team.

* To deal with the general public or business customers?

* To work sociable or unsociable hours? You may also want to think about the kind of ‘turnaround’you like- short contact and simple transactions with customers, longer-term project management style activities, or a combination of both.

My advice would be not to focus too much on the product or be put off by something that doesn’t initially grab you. Once you start thinking about the possibilities, you might get excited about a business you never previously considered.

Signage is a great example. Once potential franchisees start investigating the visual communications sector, they soon discover the huge range of opportunities available. FASTSIGNS is at the forefront of the sector, identifying new opportunities and new markets. Also, there is a great diversity of customers, with franchisees regularly dealing with every kind of business, from sole traders to international companies.

A lot of your research can be done ‘armchair style’ in your own home, but once you’ve got an idea of the areas that interest you I recommend visiting one of the many franchise exhibitions that take place across the UK each year.

The British Franchise Association is a good source of information regarding upcoming events and has an extensive list of members. However, before visiting an exhibition compile a shortlist of franchises you want to see before you go and prepare some questions in advance. Otherwise it can be an overwhelming experience and your visit won’t be as productive as it could be.

Magazines and websites are also a great source of information, often containing real-life case studies about franchisees who are ‘doing the job’ already.

Get support

Most franchises offer some form of initial training and ongoing support, but the best way to find out if it’s any good is to talk to existing franchisees. Here are the main categories of support you should look for:

* Technical/operational help.This could be the franchisor carrying out research and development in the marketplace, or sourcing the best equipment and providing you with the training needed to operate it. At FASTSIGNS we invest hugely in R&D and work closely with all the major printer and media manufacturers, testing their latest products. We also provide continual training to keep our centre owners up to date with the latest technology.

* Sales and marketing support. Assistance with your marketing activity is crucial and an ongoing, proactive marketing plan will keep business flowing and help you to avoid the peaks and troughs.

Based on 25 years’ experience, FASTSIGNS has a marketing plan that is mapped out each year, guiding franchisees on who to target and what to buy at what time of the year, plus providing advice on who to talk to and when. Web-based marketing is critical for most businesses, so it’s important that franchisors provide some support and guidance in this area. Do they helpyou to market via email and the web? Is some kind of web presence included in your package? FASTSIGNS has also embraced the world of social media marketing, which is gathering momentum.

* Supplier relationships. While it is definitely a plus for a franchisor to negotiate preferential rates for its network of franchisees, you may wish to steer clear of franchises that tie you to particular suppliers.

* Networking. By which I mean getting together with the rest of the franchisee network. One of the main strengths of a franchise operation is its network. Ask the franchisor if there are regular opportunities to get together and if there are forums to exchange ideas and communicate with other franchisees.

We bring our network together regularly to share best practice, carry out training and discuss business opportunities. We also run an award scheme to formally recognize our top performing, most improving and ‘biggest effort’ franchises. You might not like this approach, as it does introduce an element of competition, however for some people it’s motivational.

Finance

Now let’s talk money. A great question to ask a franchisor is simply: how do you make your money? More specifically, what are the franchisor’s revenue streams and what proportion of the overall turnover does each contribute?

There is a range of different systems out there. Some franchisors make the lion’s share of their income from selling products to their franchisees, while others make their money from charging a royalty on sales. FASTSIGNS falls into the latter category, which means we have a vested interest in facilitating the sales and profitability of our franchisees.

Finally, check out the financial stability of a franchise before you take the plunge; a good way to do this is to talk to the franchise department of your local bank. Royal Bank of Scotland, NatWest, Lloyds TSB and HSBC all have specialist franchising departments and have done their own research on franchisors.