Franchise Focus Business News…

Ever wondered what happens when you discover a franchise opportunity on our site, get all tingely with excitement and submit an enquiry form?

You have already taken the first step on the path to being your own boss so congratulations!

Your Lead

We let the franchisor know you’re interested straight away, so they can take a look at your details, and see if you’re a suitable candidate. At this early stage, the information you provide about the amount you have to invest and the areas you are interested are important to let the franchisor know a little bit about you.

Contact You

When the franchisor gets your details, their next step will be to contact you, by the channels which you indicated. This could be a quick phone call or an email and will usually provide you with extra information about the opportunity. This initial contact is vital to ensure the franchisee, franchisor and the business itself suits all involved.

Face to Face

If both parties are still interested, the next step will usually be to meet in flesh and blood. A meeting may be arranged for a public location; you might be invited along to a discovery day or you may be invited to take a peek around head offices or another franchisees premises. Any additional information you receive about the company at this stages may be subject to a confidentiality agreement.

Evaluation and Research

At this stage, it’s import that you research the business model, the market and previous franchisees. The franchisor will assess you to make sure you’re the right person to take on as a franchisee, and offer you the opportunity to meet some franchisees.

The Agreeement

When both parties are confident about going ahead with the franchise, you will be provided with the franchise agreement. This is the contract which will set out the terms and conditions of your new business, and it will outline the rights and responsibilities of both parties. This can often be a very long document, and you will be given time to seek legal advice. You may have to pay a deposit to the franchisor at this stage, which may be non-refundable.

Financing

If you require lending assistance, either through the franchisor or a high street bank, you will have to arrange this finance, usually before the franchise agreement is signed. This may involve creating a business plan, and one or more meetings with a bank manager. Franchisors can usually provide support and documentation, or will attend any bank meetings with you. If you are using your savings, you may need to give your bank or building society notice that you intend to withdraw the funds.

Payment and Signature

Both you and the franchisor will sign the franchise agreement, and at this stage you will usually be expected to pay the the full licence fee (or a portion of it).

Congratulations, you are now officially a franchise business owner!

Training

The training provided can vary from franchise to franchise. It can last anywhere between a few days and a few months.

• Hands-on training where you are invited to an existing franchise location to learn the ropes.
• Residential training, where you will receive focused and concentrated training.
• Head office training, where you will attend head office to take part in a training programme.
• Trainer comes to you, where the franchisor will send a trainer to you for one-on-one training.
• A combination of the above, which may include classroom or hands-on learning.

The Launch

The franchisor will usually provide significant support to help you launch your business and get trading. This help may include advice on marketing and event-planning. Members from head office will usually attend, as well as local people, small business owners and even the media.

Your Own Boss

Once you’ve launched, you are officially your own boss, you’ve finally made it! As you are still learning at this early stage, the franchise team will be on hand to provide advice when needed, whilst giving you the space and freedom to get to work. You will usually be provided with guidelines and operations manuals, and you may be contractually obliged to use these.

Year One

After twelve months, the hardest graft has been done, but you’re not finished yet. You will be operating without the need for constant support from your franchisor, but they will be available to help you grow and expand your business. Many franchisees will have made their initial investment back by this stage. Many franchisees may be obliged to pay franchise fees and follow the outlined systems.

By now, you will be working the hours that suit you, and you as a successful franchisee!

Take a look at our success stories. It could be you this time next year!

This week, ACCA certified accountant Anita Brook of Accounts Assist, published an interesting article on choosing the right medium for your business. It is important for entrepreneurs to consider this option carefully when starting their own business. The following options may be available to you:

Sole trader: This means that you will be the sole individual registered with HMRC in order to pay income tax etc. This option can avoid a lot of paperwork registering Companies Houses, but can be more costly and difficult to sell on.

Partnership: This is made up of between “two and twenty” people and all liability is shared between the partners. Even though it is not required by law, Anita advises partners to draw up a Partnership deed to avoid complications.

Limited Liability Partnership: LLP’s can offer great flexibility to partnerships, as it creates a company and thereby removes responsibility from the individual. However, the creation of an LLP can involve a lot of paperwork and higher accountancy fees.  

Limited: A Limited Company requires directors, who have defined roles with the company. Therefore, the danger of disputes is lessened. Limited companies exist as entities separate from their shareholders, which removes them from any liability. However, there is a considerably higher amount of paperwork and accountancy fees involved.

There are obvious benefits and downsides to each of the business structures above, to find out more visit Anita’s article, and also visit Franchise Direct’s directory of the latest business opportunities.

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.