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
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.
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.
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
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.