5 Points To Consider When Researching A Franchise Business


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Posted on November 29, 2009
Filed Under Small Business |

You can peruse numerous horror stories online regarding individuals starting up a franchise for sale and losing out as a rogue franchiser runs off together with their cash. It’s true that this happens although on the other side of the coin there are successful franchisees trading now with excellent worthwhile businesses. It might appear some are fortunate and some are not, however there are a number of things you can consider throughout the buying process of the franchise business to minimise the possiblity of hitting on a ‘rogue’ franchisor and make the most of the chance of you becoming a of the success stories.

Take into account these 5 points when researching a franchise opportunity of interest.

1. The opinions that matter

Who better to tell you whether a franchise system is good or not than individuals who have actually operated it themselves. The internet is turning into a constantly growing voice when it comes to service levels experienced by customers on goods and services. A quick search on the internet for the franchise system plus ‘review’ tagged on the end will usually give stacks of results posted by those who have experienced the franchise opportunity first hand, both good and bad. Getting hold of a listing of present franchisees from UK franchise businesses you might be genuinely fascinated in is an additional way of getting hold of some useful insight as you walk along the buying process.

2. Backup & Training

Take time to pay a visit to the head offices of any franchisor you think about. It will often offer you some helpful insight into their operation and whilst you’re there you can inspect any education facilities and material they have available. Again, its an important question to ask their current franchisees, as a good franchisor will offer as much support and guidance as required to offer their franchisees all the tools they need to achieve success.

3. Reputation and Brand

Have you heard of the brand? And what type of reputation do they possess? This is common sense in reality although its also worth bearing in mind that there are lots of lesser, lesser acknowledged brands which may well still possess good reptutation and are still worth bearing in mind. Not all franchisors hold the investment to brand themselves strongly on TV or billboard however this is not necessarily a motive to discount them if they can show evidence of a track record of industry standing and integrity.

4. Banks Opinion

The franchise departments of the major banks are a great place to get a neutral view of the franchise you might be considering. It’s probable the bank will usually be involved as part of the franchise investment since the bulk of budding franchisees will need to borrow money to finance their new franchise opportunities. The banks eagerness to provide finance offers a hint of the self-confidence they carry in any individual franchise. If the franchise business is clearly identified to them and has a good track record they will often be willing to lend capital rather than a franchise that maybe they possess no knowledge of or has a bad track record in their experience. The second scenario evidently represents added risk to the bank and they will be more careful to lend capital.

5. Associations

Generally countries have a franchise association of some type that can provide some level of security when it comes to looking at buying into a franchise. Their job is to offer some trust in the franchise market as the franchise opportunities they approve typically need to pass some basic checks to ensure they possess established systems with a track record of success. It’s important to talk with the franchise association in your country to see if the franchise opportunity you are considering is a member and if not has the franchise association heard of them and what considerations they may present.

As a final point, your intuition can’t be under-estimated! How do you feel when you get together with the franchisor, the people behind the franchise opportunity. Do they draw out assurance and conviction with you? Don’t be fooled by promises of rapid, high earnings… on the contrary a franchisor who seems to have more reasonable attitude about building up a firm long term business is most likely a better opportunity. The people behind the franchise are the people you will be commiting to long term so can you see yourself working in conjunction with them?

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