Franchise Focus Business News…

One of the most important aspects of becoming a franchisee is to understand what kind of documents you are signing when you join the franchise. Most likely, there will be a contract that details what is expected of the franchisor as well as you, the franchisee. To ensure that you’re not legally signing yourself over to something you didn’t know about, we’ve prepared a handy guide to looking at a franchise agreement.

Keep in mind that it’s best if you  review the agreement with a solicitor that specialises in franchises, so you don’t miss anything!

• What does the franchise agreement cover? Make sure the franchise agreement is comprehensive, and that everything the franchisor has verbally agreed with you on is also included in the franchise agreement. This document should clearly lay out all your obligations to the franchisor and indicate the payments you need to make to the franchisor.
• What am I agreeing to pay? Understand what kind of fees the franchisor will be charging. Usually there is an initial fee, but also be on the lookout for ongoing fees. These ongoing fees could be fixed or varied (varied fees are generally dependent on the percentage of revenue). Fees based on revenue can be a minimum fee or based on performance targets, and it will help you manage your franchise’s finances as you build your business.
• Do I get an exclusive territory? If you have an exclusive territory, then find out exactly what area it covers (e.g. postcode or region) and if you are only able to make sales in that territory. If you do not have an exclusive, defined territory, then make sure to stipulate what kind of direct competition is there, and how that can be avoided.
• What kind of training and support do I get? Make sure the franchise agreement mentions what initial training and set-up support you will get, as well as the franchisor’s ongoing training and support obligations. This should mention what will be involved in the training, and it might be helpful to set out a timetable for the training as well.
• Do I need to buy anything from the franchisor? If your franchise requires products, make sure the franchise agreement mentions what you have to buy from the franchisor and/or a partnered supplier, or if you can choose to purchase products from a supplier of your own choice. Buying from the franchisor often means a discount, so ensure that is written in as well.
• What are the terms of the contract? How long is the initial term of the contract? When the contract expires, is it renewable? How much do you owe if you renew?
• What happens if you sell your franchise? Make sure the franchise agreement explains what happens if you were to sell your franchise business or (morbidly enough) pass away. Also, make sure the document details when/how the franchisor can terminate the relationship.

These are important things to remember when signing a franchise agreement. If you need a franchise solicitor’s help in looking it over, browse through Franchise Direct’s selection of Franchise Solicitors.

Every year, the British Franchise Association (bfa) chooses franchisees for their Franchisee of the Year Awards. This year, the theme for the awards this year is managing change, and the finalists are in!

According to Director General Brian Smart, these awards celebrate the UK’s top franchisees and are “all a great example of how focus and drive, when supplemented by the support of a franchisor, results in the growth of a sustainable and profitable business.”

These franchisors are doing something right, from picking the franchisees that fit to providing the training and support needed to run a successful franchise. The bfa will announce the winners on 2nd October at the International Convention Centre black-tie gala dinner in Birmingham.

If you’re interested in finding out more about some of these Franchisee of the Year finalists, check out their profiles on Franchise Direct.

• Domino’s Pizza (Franchisee Lisa Tobias)
• Dream Doors (Franchisee Trevor Conduit)
• Fastsigns (Franchisee Jenny Boreham)
• Oscar Pet Foods (Franchisees Neil & Lorraine Stapleton)

We’ve all heard the statistics about how the franchising industry in the UK is flourishing! And that gave us some insight into the fact that redundancies can lead people to start their own businesses or franchises. This is proving to be true, all across the UK.

According to research conducted by the GetSet for Business consultancy, 40% of business owners say their fear of losing financial security prompted them to start their own business.  Of course, other factors that drew people to start their own business include flexible hours and working from home, as well as being your own boss.

In fact, many of the success stories from franchisees have stemmed from a redundancy, which made the individual then consider going into business for themselves. Instead of considering redundancy as a doomed life sentence, it can be a great opportunity to do what you’ve always wanted to do!

People who have been made redundant were often in jobs where they gained much knowledge and skill. Franchisors are often looking for people with experience in certain fields and marketable skills (although training is provided in many franchises), as well as a track record of success and the funds to draw from to start the franchise.

One of the most important things to consider if you become unemployed is whether or not you have the capital to open up your own business. This could be a turning point in your future. Instead of rushing into job search mode, you may want to think about the following:

• Am I currently happy in the field I am in, or do I want to change sectors?
• Do I want more flexibility and freedom in my work week?
• Do I want to try something new?
• Am I wanting to work for myself and be my own boss?

Consider your answer to these questions, and think about a franchise: after all, 9 out of 10 franchises succeed, whilst 4 out of 5 independent businesses fail within the first two years of business. Then consider looking for a franchise that could be your dream job!

Owning and operating a successful business can be a very satisfying way to earn a living. But are you prepared for the responsibilities associated with owning a business? You should carefully consider the self assessment checklist below before starting your own business. It lists the personal attributes and factors which increase your chances of success.

Personal Qualities

I am prepared to work hard and give full-time commitment to the business.

I have the necessary persistence and tenacity to stick with the business through thick and thin.

I have a strong desire to be self-reliant.

I believe that I will be successful through my own efforts.

I am physically and emotionally resilient.

I can work independently.

Your Attitude to Risk

I am prepared to risk my own money and assets in the business.

I recognise the importance of professional advice and guidance before I invest my money in the business and during and after business start up.

Your Family

I have the full support of my family.

My family will cope with the demands of the business on my time.

Business Skills and Know-How

I have a clear market focus with a specialized service or product that fills an ongoing need.

I have specific skills or know how in the product or service area I am contemplating.

I have previous hands-on business experience in business.

I am well organized and efficient.

I have a basic knowledge of accounting and cash flow management.

I feel comfortable selling to people.

I can organize and motivate others to get things done.

Finance

I can raise the funds required  to get a business off the ground and survive the initial start-up phase.

I have sufficient reserves of working capital should the business be slower to grow than expected.

When you start your new franchise, you’ll find that there are certain accounting and tax responsibilities that follow. Whether you’re an accounting whiz or not, you will need to find a way to figure out what kind of taxes your new business owes, and whether or not you need to register for VAT.

This may get even more complicated for franchisees when the basic tax threshold is raised later this year. There will be an increase in personal allowances, enabling all basic-rate tax payers to earn £600 more this year before they have to pay taxes on their income.

If your franchise has employees, then you as the employer must ensure that your employees’ September pay packet shows the difference, because these changes are backdated. This may get confusing or difficult for some of the small business owners and franchisees that do the payroll themselves.

Check out Business Link’s helpful guide on Taxes, returns and payroll. This may help walk you through some of your responsibilities. Also check with your accountant to see if he/she can help walk you through the tax changes.

If you’re still unsure of what to do, look at Franchise Direct’s directory of franchise consultants that. There’s a list of banks and consultancies that can provide financial assistance that might be of help to you, whether you are borrowing money or seeking accounting, taxation and business advice.