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5 Tips when Considering a Franchise Business

By Joel Claw

Here is some good advice for those pursuing a franchise opportunity. These 5 tips can help you to make the right decision.

A well tested and well supported franchise can provide a proven route to starting your own business. On the other side of the coin, a bad franchise can end up costing you you’re initial investment capital along with a lot of heart ache and pain.

We have provided five tips that can help when considering investing in a franchise, to increase the chances of choosing a ‘good one’ franchise and avoiding the bad. Of course, much of the choices you make will depend upon your own judgement of the situation. Always look to trust the facts and not be swayed by unsubstantiated promises.

Digging for Background Information

These days, the Internet provides a great way to research any company. You can check their own website of course but also check to see what is being said about them from third party sources. Is there a there a good buzz about what they are doing? Or does a search online lead you to strings of annoyed and unsatisfied comments.

You can also check out the website for the government body that keeps company registration information. These website usually incorporate a search feature to enable you to dig a little into the company, its Directors and what other companies they might still or previously have been involved in. This can help you to understand the company you are dealing with.

Visit the Franchise Business HQ

Put aside some time to go and visit the franchisors head quarters. It’s important to spend some time there and get a feel for the staff, the franchise owners and how well organised they are. Much of the success of a franchise depends on following a proven system so an air of organisation and structure should be apparent at their HQ. Make sure you get along and feel comfortable with the franchise owners since a commitment to running their franchise will see you entering a kind of partnership with them for many years.

Existing Franchisees

A good franchisor will have no problem referring you to a number of their existing franchisees. Make sure you spend some time either calling or meeting with a few of them. They are one of your best sources of information since they are already running the business that you could be running if you choose to take on the franchise. Find out from them their opinions on how the franchise works for them and what level of support and ongoing training they receive from the franchisor. These are both important elements of any good franchise.

Legal Representation

Any franchise will require signing of legal documentation. This usually takes the form of a franchise agreement and may also include other documents. The franchise agreement is designed to protect both yourself and the franchisors system. The legal documents are usually complex and require a lawyer who is familiar with franchising to read it and make you fully aware of the implications of signing it. This will ensure you don’t sign anything that you later regret.

Trust the facts

A good franchisor will have piloted the business model usually in the form of one or more pilot businesses. This provides good evidence on paper of how the franchise business model makes a profitable business option. If there is no evidence of pilot business activity and actual figures to back up claims of what might be achieved then its wise to be suspicious. Of course no investment is without some element of risk, but making sure you have the facts to hand will help to minimize that risk element as much as possible.

Ultimately, whether you are considering a franchise business or any other type of business start up, you as the business owner have the responsibility of working hard and being committed to making the business work. Doing some basic ground work before making any kind of business investment though, is simply showing due diligence.

Joel Caws is Technical Director for Select Your Franchise UK Ltd, a website promoting information relating to the franchise industry. He is and is a prolific blog writer on the subject of franchising and small business issues.

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