27 Aug How Easy Is It To Buy And Run A Franchise?
How Easy Is It To Buy And Run A Franchise?
Buying and Running A Franchise
The beauty of franchise businesses is that these concerns are significantly minimised.
With traditional business models, getting started is an expensive business and, a lot of banks will be reluctant to take a chance on you with a loan due to the high failure rates of brand new businesses.
With a franchise business, you’re essentially buying into a business that is already proven to be successful, making it much less risky. Additionally, the start-up costs for a franchise business tend to be much lower than starting a brand new business from the ground up.
Sounds great, right? Absolutely, however, I’m not gonna lie, a successful franchise isn’t all plain sailing, so, in this article, I’m going to answer that burning question – just how easy is it to buy and run a franchise?
Choosing your franchise
When starting your franchise journey, the first thing that you’ll notice is that there are, quite literally, hundreds of different opportunities available; and not all of them are 100% legit.
When examining opportunities, you’ll need to put in the time and effort to read all of the fine print and do your research to ensure that you’re not chucking your money down the toilet.
Make sure that you read the franchise agreements carefully and, where possible, speak to existing franchisees to get the lowdown on what it’s like to run the business and what kind of money you’re likely to be able to make.
Finding the folding
Once you’ve chosen your franchise business, there will, in most cases, be a fee to secure the business and a number of other start-up fees which will need to be paid before you can get started.
These costs vary widely depending on the franchise and can range from a few hundred pounds to several thousand. Some franchisors will expect you to put up part of the fees from your own personal funds, with the rest coming from a bank or other financial organisation.
Banks will tend to look fairly favourably on those buying a franchise as opposed to entrepreneurs setting out on their own due to the reduced risk but, you may still need to shop around for the most affordable deal. And always keep in mind the fact that you’re on the hook for repaying your loan, regardless of the success or failure of your business.
Seal of approval
In most cases, you’ll need to follow an approval process with your chosen franchisor and, while this differs from business to business, the process will most likely include the following steps:
Disclosure agreement – Once you’ve expressed your interest in a franchise, you’ll be sent a disclosure agreement that will detail everything you need to know, including costs and contractual obligations. You should always read this extremely carefully before proceeding to the next stage.
Application – You’ll be required to complete a comprehensive application form, either online or by post, to ascertain your suitability in terms of skills, experience and financial viability.
The review – Once you’ve submitted your application, the franchisor will review this to ascertain your suitability. The franchisor will be looking at several factors, including your credit status. They’ll also perform a background check so, if anything is lurking in your past that you’re less than proud of, it’s always best to be honest about this upfront.
Interview – If everything checks out during the review stage, you’ll usually be invited to an interview with the franchisor. As with a regular job interview, this is designed to determine if your personality is the right fit for the business. At this stage, again, like a normal interview, you’ll want to make sure that you know everything there is to know about the business in order to impress the interview panel.
Funding – If you’ve smashed the interview out of the park, you will then receive a franchise offer pending funding confirmation. During this step, you’ll need to show evidence to the franchisor that you either already have the funds available or have a loan promise from a bank or financer ready and waiting.
Contract – On approval of your funding status, you’ll be sent a franchise agreement. I would absolutely always recommend hiring a solicitor to look this over for you to make sure that you avoid any nasty surprises further down the line.
Induction & training – Once you’re all signed up to your franchise business, and you’ve handed over the necessary fees, your franchisor will usually schedule you in for an induction and a period of training. During this important phase, you’ll be shown the ins and outs of the business as well as being briefed on all of the company rules and guidelines which you will be expected to follow.
Running your business
So, congratulations on securing your new franchise business; now the hard work really begins! When getting started with your business, you’ll have a fair few tasks ahead of you and, some of these are:
Getting the word out
Although you may receive some help from your franchisor, you’ll be responsible for marketing your business and, depending on the nature of the franchise; you can do this through:
• Social media
• Local newspaper advertising
• On-site events
It’s essential that you start marketing your business as early as possible to drum up interest long before you open the doors for the first time.
The people part
If the nature of your business means that you can’t get started by yourself, for example, a fast-food chain or store, then you’ll need to hire staff to help you get started. As with your marketing, you can do this through social media and advertising in your local newspaper as well as online recruitment sites.
Supply and demand
You’ll be responsible for ensuring that you have all of the equipment, materials and products for your business. In most cases, your franchisor will already have suppliers in place so, you’ll need to familiarise yourself with these and make sure that you have enough stock for when you open.
During the day to day running of your business, you’ll be keeping a lot of balls in the air, and you can expect to be kept busy with several tasks, including:
• Inventory and stock ordering
• Management of employee rotas
• Management of payroll
• Book-keeping (although you’ll probably want to hire a professional for this)
• Paying of bills
• PR and advertising
As your business becomes more successful, you’ll be able to hand over the reins of some of these tasks to your employees but, to begin with, you probably won’t have the budget for this. This means that you can expect to be working some crazy long hours and will literally be living and breathing your business for it to be a success.
So, how easy is it to buy and run a franchise?
While the process of signing up and getting started with your business may be a little time-consuming, it is relatively easy as you’ll get a lot of help and support from your franchisor if you’ve chosen wisely.
When it comes to running your business, you’ll still receive support from your franchisor, but it will be down to learning on your feet and putting in the hours and commitment necessary to make your franchise work.
The great news is that you’ll have guidelines in place to keep you on the right path and the benefit of an established brand behind you which means that, as long as you’re prepared to put in the work, buying and running a franchise is, in fact, pretty darn easy.