Guide to Franchising
Buying a franchise gives you the opportunity to run your own business, along proven methods and possibly in an industry in which you have no previous experience. The variety of types of business and levels of investment on offer is enormous, and it is important, therefore that you take your time and do your homework first. Although the failure rate in franchising is much lower than that in many other new businesses - 95% of franchisees in 2004 reported profitability - there are still risks involved, and it will be very hard work, particularly in the first years.
In buying a business format franchise, you are buying the right to run a system that someone else has proved will work. You have the benefits of trading under what may be a very well recognised brand name. There should also be on-going support from the franchisor, and an agreement, setting out the terms of payment, and the obligations of both parties.
Prospective franchisees you should research the company fully.
- Be sure to speak to existing franchisees, and ones that you choose - not just the ones the franchisor directs you to.
- Be sure it is a business that suits you - it is going to take up a lot of your time, particularly in the first years, so don?t chose a Pizza outlet if you are allergic to cheese!
- Be realistic about the amount of money you need to make, and choose a business that should cover that. Like any other business, a common reason for a franchise to fail is too much money being taken out too early.
- Ask the franchisor to disclose to you his financial record, the records of the Directors and the basis of the financial projections they make on your particular franchise.
- Take professional advice - have the franchise agreement checked by a specialist solicitor.
Daltons are proud to be an affiliate member of the British Franchise Association
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