Franchise Opportunities: Making The Right Choice

A franchise is often considered a less risky way of launching a new business because, in theory, it involves working with a proven system and business model. And because of this, lenders are often more willing to loosen their purse strings and provide the necessary funds to help get the business off the ground.

Franchising certainly offers plenty of potential reward; according to the annual NatWest and British Franchise Association (BFA) survey, 92% of franchisees – including new businesses – reported profitability in 2013.

However, franchising isn’t a surefire route to success. Just like any other business, making a franchise work requires plenty of effort – and it starts with planning and researching your options. You need to find the right kind of franchise for you, making sure it’s a viable prospect given your location and circumstances. It’s also important you get the best deal you can.

But before you go any further down the line, ask yourself whether franchising really is for you. Are you happy to follow someone else’s business model and system or would you prefer the greater freedom that a completely independent business would give you? You need to weigh up the pros and cons and decide which type of business suits your way of working.

Remember, also, that franchising involves a long-term commitment. Depending on your contract agreement, you might be tied in for a number of years so it’s not something you should enter into lightly.

If you’re convinced franchising is for you, the next thing to decide upon is the kind of franchise business you want to start. You obviously need to choose something that has the potential to be profitable, but there’s no point in choosing an area of business you’re not suited to or won’t enjoy working in.

Also consider suitability according to your region. Some franchise businesses are more relevant to certain areas than others. However, you might find a gap in the market so do some market research to see if you can identify any customer needs that aren’t currently being met by a franchise business in your location.

When choosing a potential franchisor, check for membership of the BFA. If the franchise is affiliated, it will be subject to a code of conduct and will also be required to submit key information to the association – including audited accounts – to demonstrate their suitability.

Look for a business format franchise with an established, proven business model and standard agreement, preferably drawn up by a BFA-accredited lawyer. Make sure there is an option to renew at the end of the fixed term. It might also be worth your while asking your bank for their opinion on your potential franchisor. It might have useful information and, what’s more, if the bank has an established relationship with the franchisor it could help your chances of obtaining the necessary funding to launch your business.

Franchising obviously involves close business relationships and it’s important you have complete trust in whichever franchisor you choose to limit potential problems in the future. For that reason, it could be worthwhile enlisting the help of a specialist franchise lawyer to advise you and assist you with contractual details.

For more information on this and other franchise-related issues, visit the BFA website at http://www.thebfa.org