8 Top Tips When Buying A Franchise
Find out all you can first ...
Have you ever thought of running your own business but not sure how to get started? Wondering how to find a unique idea in your area or if anyone would be interested in what you come up with? Have you ever considered buying a franchise?
If you're considering buying a franchise, make sure you do your research first!
Although I'm the franchisor and Managing Director of Extra Help Limited, I'm also the CEO of The Approved Franchise Association. Today I thought I'd wear that hat when writing my blog post, and give you some top tips to help you get started.
"There are lots of franchises to choose from, so how do you make the right choice?"
The most important advice I can give you would be to choose something which excites you. You're going to be working on this business, possibly full-time, for the foreseeable future so you want something you can get passionate about.
Franchising is also about support. You don't want to buy a franchise from a company who takes your money and leaves you to get on with it. When looking at a franchise business, also take the whole package into consideration, including how the franchisor supports you.
Here are my 8 top tips for buying a franchise:
What will you be getting for your investment? Find out exactly what the franchise gives you, from marketing to ongoing support. Does the franchisor find new leads for you or is that up to you?
What is the initial cost of the franchise? Does it seem to be in line with other franchises of its type? Cheaper isn't always better!
What support does the franchisor offer after the initial training and investment?
How much are the monthly management fees? Is it a flat fee or a percentage? Is it in line with other franchise businesses of the same type? What are you getting in return for your monthly management fee?
How long will it take you to build up your franchise into profit? How much capital will you need to live until you are making a good wage? Again, initial purchase costs and the monthly management fees will play a part in how quickly you will start making money.
How successful are the other franchisees? Ask to talk with them, a good franchisor will encourage this in the initial stages. If they don't want you to talk to other franchisees then that's a red flag you should pay attention to.
When choosing where you want to run your franchise, look at the demographics of the local area. If you're opening a shop or restaurant, you need to think about the location and how much parking is available.
The franchise agreement is often in favour of the franchisor. That's normal, but do check the renewal requirements and find out if there will be another investment required at this time? If in any doubt, get a franchise savvy lawyer to look at it for you.
If you are considering buying a franchise and you are a little confused with all the choice, check which franchises are members of organisations such as The Approved Franchise Association (the AFA) or the British Franchise Association (BFA).
"Although this is no guarantee you'll buy the right franchise, both of these organisations are there to help you!"
For the franchisor to become a member, we look into the franchise model and speak to both the franchisors and franchisees about their business and make sure they abide by the European Code of Ethics for Franchising before we allow them to join.
If you'd like to find out more about franchising from the Approved Franchise Association, you can visit our website or call us on 0208 088 2400 for some independent advice.
Until next time ...
Claire is a serial entrepreneur having successfully established a networking group, a magazine advertising company and a building contracting company over the past few years.
Now living in Cornwall and handling Extra Help operations countrywide, Claire has a passion for business and is determined to grow Extra Help into a nationwide brand.