What to Consider Before Taking on a Franchise Business

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A franchise is a type of license that a party acquires to allow them to have access to a business’s proprietary knowledge, processes, and trademarks in order to allow the party to sell a product or provide a service under the business’s name. If you are considering following this business model, learn with us how to make a successful franchise scheme.

Franchise Business 2
Franchise Business 2

A good franchise scheme isn’t just about having a good idea. It’s also about the franchisor’s ability to prove that idea and whether or not they have the resources – both human and financial – available to develop it. The right infrastructure should be built around the franchise in order to ensure that the brand can be replicated, and it needs to be strong enough to continue to grow and develop in response to ongoing market changes and shifts.

 

What Makes a Good Franchise System?

If you’re looking for a business franchise idea, there are a few things to keep in mind that make a good franchise system. The idea should be based on a product or service that is in demand, and it should offer distinct advantages over the competition. A successful franchisor will have proven the concept prior to franchising and should have historical figures to demonstrate its success.

Another key aspect of a good franchise scheme is highlighting the support that is provided

to franchisees to help them get started, and a comprehensive training program in place so that franchisees can learn the business. They should provide the franchisee with comprehensive training manuals for themselves and employees and be committed to the ongoing development of franchisees. Finally, any franchisor should be trademarked and a member of the British Franchise Association.

If you’re considering starting a franchise, keep these tips in mind when searching for the right business for you.

Franchise Business 3
Franchise Business

 

Research:

It’s a good idea to research the franchise market thoroughly to help you get a better understanding of how it all works and determine which franchises are the most profitable to invest in while looking for a franchise UK. Read the franchise trade press, sign up for industry newsletters and check out the various sites and blogs dedicated to franchising. You can also find franchise opportunities and browse franchises for sale at Franchise Local, a site that not only provides you with listings for UK franchises but a wealth of franchise news, advice, and more.

Speak to Current Franchisees:

Once you have found a potential franchisor, ask them to provide you with a list of current franchisees to speak to. Ask franchisees what the pros and cons are and request to spend some time with them in the business to get a clear idea of what to expect and figure out whether or not it is the right route for you. If a franchisor is reluctant to let you contact franchisees freely without valid reasons, you may have cause for suspicion.

Franchise Business
Franchise Business

 

Check the Financials:

Always check the validity of the business model and projects by conducting your own research into your local market. There are many variables that can affect your projects, such as disposable income, product and buying trends, and franchise location. Existing franchisees, your bank and a good accountant can help you verify any findings and/or assumptions. Bear in mind that if projected revenues look too good to be true, it’s’ likely that they are. And, consider that your initial startup costs will be deducted from your revenues; make sure that you aren’t leaving yourself short.

 

Consider Fees and Charges:

Make sure that you have considered all the fees and charges that you may be required to pay the franchisor, and what they include. For example, does the franchise fee include fees for stock and equipment, premises fit-out, and training? You should also check for any ongoing fees that you may be required to pay such as regular employee training, the purchase or upgrade of equipment, or minimum advertising and marketing spend monthly or annually. Find out whether there will be any other costs required to get the franchise started, such as rent deposits, legal fees, vehicle costs. Your franchisor should be able to give you a breakdown of the costs you can expect and what is included.

Do You Have What it Takes?

Finally, consider whether you have what it takes to run a successful franchise. Being a franchisee requires the right attitude and set of skills; it can be a lot of hard work and requires a lot of commitment, stamina, and energy. Many people mistakenly believe that once you’ve paid the franchising fee, all you need to do is sit back and watch the money flood in, but this couldn’t be further from the truth. The more effort you put into your franchise, the more successful it is likely to be. While the franchisor will be there to help you get set up and provide support with the daily running of your business, you should not rely on them to build and run the business for you.

If you’ve considered all of the above and still want to go ahead with a franchise, be sure to prepare a comprehensive business plan, which takes any factors that may positively or negatively affect your business performance into account.

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