2009 8 Dec

5 Things To Consider When Researching A Franchise

You can often find a lot of horror stories on the web regarding those starting up a franchise and losing out as a rogue franchiser takes off together with their cash. It’s true that this happens however on the other hand there are profitable franchisees trading now with excellent rewarding businesses. It may seem some are fortunate and others are not, nonetheless there are some routes you can consider through the investing process of the franchise to lessen the possiblity of hitting on a ‘rogue’ franchisor and make the most of the chance of you becoming one of the success stories.

Think about these 5 pointers when looking at a franchise of appeal.

1. The opinions that matter

Who better to chat to, to find out if a franchise system is good or not than those who have essentially run it themselves. The web is becoming a constantly increasing voice when it comes down to service levels experienced by consumers on products and services. A brief search on the web for the franchise business plus ‘review’ tagged on the end will typically give a lot of results written by people who have experienced the franchise system first hand, both good and bad. Getting hold of a record of present franchisees from UK franchise business opportunities you may be genuinely fascinated in is a further way of getting some decent insight as you move along the buying process.

2. Backup & Training

Ensure you pay a visit to the head offices of any franchisor you think about. It will often give you some good insight into their company and as you’re there you can check out any education facilities and documentation they might provide. Again, its a valuable question to ask their current franchisees, as a good quality franchisor will offer as much support and training as required to offer their franchisees all the tools they need to be successful.

3. Reputation and Brand

Have you heard of the brand? And what class of reputation do they hold? This is common sense in actual fact but its also worth bearing in mind that there are lots of smaller, lesser known brands which may still possess decent reptutation and are still worth taking into account. Not all franchisors have the capital to brand themselves strongly on television or ad boards however this is not automatically a reason to pass over them if they can display a track record of industry status and integrity.

4. Banks View

The franchise departments of the banks are a significant place to get an unbiased view of the franchise opportunity you might be thinking about. It’s possible the bank will often be involved as part of the franchise venture given that the bulk of possible franchisees will need to borrow money to invest in their new franchise business opportunities. The major banks motivation to lend gives a hint of the security they maintain in any particular franchise. If the franchise is clearly well-known to them and has a decent track record they will often be eager to lend capital as oppose to a franchise that perhaps they possess no knowledge of or has a inadequate track record in their experience. The latter evidently affords extra risk to the bank and they will often be more wary to lend capital.

5. Associations

Most countries have a franchise association of some description which can provide some level of confidence when it comes down to looking at buying a franchise system. Their activity is to offer some confidence in the franchise marketplace as the franchise opportunities they approve usually need to pass a number of basic checks to ensure they carry established systems and a track record of success. It’s important to check with the franchise association in your country to establish if the franchise system you are taking into consideration is a member and if not has the franchise association heard of them and what opinions they may offer.

Finally, the good, old fashioned gut feeling can’t be under-estimated! What are your first impressions when you get together with the franchisor, the people behind the franchise opportunity. Do they stir up assurance and belief with you? Don’t be taken in by promises of fast, high profits… in fact a franchisor who seems to have more reasonable style about building up a solid long term business is possibly a better option. The people behind the franchise are the ones you will be commiting to long term so could you see yourself working alongside them?