Finding the best franchise for you

The British Franchise Association, outlines five key areas to consider in your search for the ideal franchise

Franchising nowadays presents a vast array of possibilities across an eclectic mix of industries, with some 1,000 brands using the model in the UK. There really is something for every passion and every budget. Not forgetting that one of the many advantages of franchising is that it is a system that usually does not require previous experience within the industry in question, as comprehensive initial and ongoing training is offered by ethical franchisors, along with a head office team that’s available to call on for support.

If you’re thinking about buying a franchise, how do you go about identifying the brands that best suit your needs? Here are some of the key areas to consider and questions to ask yourself:

Membership of the British Franchise Association
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The bfa accredits franchisors using a stringent set of criteria based on operational procedures, franchisor/ franchisee practices and the European Code of Ethics for Franchising. All members are listed on the bfa’s website to allow potential franchisees to determine which franchisors have passed these checks - not all do.

Financial commitment
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Levels of investment range greatly - from smaller amounts, which you may already have available, to larger sums, which you may need a bank loan for. Assess and understand, from the beginning of your process, what you can afford to invest and how much you are prepared to borrow. And remember to consider working capital requirements while your business is establishing itself and may not be turning a profit.

There are three major banking groups the bfa recognises as specialists in franchising - HSBC, Lloyds and RBS/NatWest. Make sure you make contact with their franchise departments from the outset.

Lifestyle
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You need to be happy with the commitment required to make your new business a success. Franchising enables you to develop your existing skill set or become your own boss doing something you are passionate about, but inexperienced in, so think about what you are good at and can take on wholeheartedly. You also need to consider the support and understanding of those around you - your friends and family - which some franchisors like to gauge as part of their recruitment process.

Research
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Your research into a brand and its people is crucial to finding the right franchise for you. Be thorough, and include the following:

* Speak to existing franchisees. You want an extensive list to choose from, not just a few the franchisor provides you information for. Speak to both successful and any less successful franchisees to give you a rounded view. If you can, go and visit them at their place of work. In some networks you will be encouraged to spend the day with franchisees as part of the recruitment process.

* Understand the business. Make sure you understand all the business operations and what is involved on a daily basis.

* Training. Be sure that the training provided, both initially to get you up and running and on an ongoing basis to help your business grow, is sufficient for you to be able to gain the skills required to operate the business successfully.

* Ongoing fees. Franchisors charge an ongoing management service fee, which will usually be collected either as a percentage of turnover or through the supply of the raw materials you need to operate. Make sure you understand the structure and level of fees - and what you get in return. These fees fund the ongoing support you receive and the future development of the business. Although in some cases management service fees could be a flat fee per month, there can be a clear advantage to fees based on a percentage of turnover, as the franchisor will be encouraged to help you succeed - your success will mean its success.

* The people. Don’t underestimate the importance of meeting the people involved at head office, finding out who you would be in contact with and what their experience is.

* Success rates. Ask about success rates of other franchisees in the network. There may be failures, but the important thing is to understand why these occurred.

* Recruitment. If the franchisor doesn’t appear selective about who it recruits, walk away. You want to see it is stringent in its recruitment process and not just letting anyone and everyone join the network whose brand you will be trading under. Investing in a franchise should be a two-way recruitment process.

Professional advice
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There are a host of professional advisers accredited by the bfa who specialise in franchising and can be invaluable in making sure you’re taking the right steps. For example, when it comes to reviewing the franchise agreement, make sure you enlist the services of a bfa member franchise solicitor to review the document, as it can save you a lot of money in the long run.

When researching the franchise market, it’s important to take your time. Make sure you assess and reassess everything before you fall in love with a concept and a dream. You’re parting with your hard earned money and making a commitment for several years - usually five at a time - so it’s essential to be certain rather than make an expensive mistake. A good franchisor won’t pressure you into a decision, as it understands the level of undertaking required and will want serious people to join its network.