The franchise sector in the UK is reported to have 930 different franchise systems offering business opportunities in an incredibly wide and diverse range of sectors including:
• Hotel and catering: which includes hotels, coffee houses, fast food chains, etc.
• Store retailing: everything from travel agencies to shoe shops to bathroom centres.
• Personal services: entertainment and tutoring for children, personal trainers, pet services, etc.
• Property services: including estate agencies as well as plumbing, cleaning, gardening, etc.
• Transport and vehicle services: couriers, car rental and vehicle repair.
• Communication services: printing, office supplies, training, recruitment and accountancy.
So how do you find your ideal opportunity with so many to choose from?
When helping aspiring franchisees find their ideal business opportunity I have always found these top tips a useful starting point in the decision-making process:
Look in the mirror
Self-awareness is paramount when considering whether you are suited to becoming a franchisee. Fully understanding your personal qualities and professional skills is a great starting point. If you are too entrepreneurial then taking a franchise and having to follow a system could be frustrating and stifling, whereas individuals with a diligent, methodical approach to business should thrive under a franchise model. There are a number of online personal profiling systems such as DISC, Caliper and MBTI that may assist you in understanding your qualities.
Play to your strengths
Once you know where your strengths lie, make a list of how you can utilise them by determining the sector and type of franchise that plays to them. Make a list of the logical factors (such as hours required, can you work from home, number of staff, return on investment, profitability, etc.) and emotional factors (such as your passion, hobbies, what you like and don’t like) that will contribute to identifying your ideal franchise opportunity.
Sort out your finances
Make a list of your assets (what you own) and your liabilities (what you owe). A key element in finding your ideal franchise is working out how much money you have to invest and how much the franchise costs, including the initial franchise fee, any start-up costs and the 'working capital' required to keep you cash positive for the duration of the franchise.
Work out your exit plan
It may sound strange to think about planning your exit before even taking up a franchise opportunity but if you don’t know where you are going, how will you know how to get there? Too many franchisees 'buy themselves a job' instead of developing a plan to 'build a saleable asset'. An ethically constructed franchise model will give a franchisee the opportunity to sell their business at any time, allowing them to cash in on the hard work, dedication and commitment they have put into developing the franchise. There is a thriving franchise resale sector in the UK with a number of prospective franchisees looking to buy a franchise territory with a proven track record and customer/client base.
Location, location, location
Understand where you want to run your franchise business from, particularly if it is a territory-based opportunity. It is always preferable for the franchisee to live inside their assigned territory; however, this can prove difficult in mature franchise networks. Having an understanding of whether you are willing to move home to secure a vacant territory with your chosen franchise is vital.
With so many franchises on offer it’s easy to spread yourself too thin and get distracted closely evaluating a large number of opportunities. Once you have identified your qualities, how they can be applied, how much money you have, what you want to achieve in the medium to long term and where you want to locate your business, select the best three to five franchise opportunities that match your personal criteria and scrutinise them as closely as possible.
The beauty parade
When you have selected your shortlist of ideal franchise opportunities, put them under the microscope. Compare and contrast each of the opportunities and see how closely their offerings match your requirements and goals. If they don’t match up, discard them and move on to the next. For those that meet your criteria, start a dialogue with the franchisor by meeting them either at their discovery days or recruitment meetings.
Undertake thorough due diligence
Don’t rely on what the franchisor says; make sure you check out everything that you’re told. Research everything you can find out about the franchisor on the internet, review their financial records, trademarks, credit ratings, the background of the directors, any reviews of the franchise, determine whether they are members of the British Franchise Association (if not, why not?), and speak to existing franchisees, if there are any.
Develop your business plan
One of the final elements of evaluating your ideal franchise is to prepare a comprehensive business plan. Your business planning process should be assisted by the franchisor or their nominated advisor but must be 'owned' by you, the franchisee. It should comprehensively review and forecast all aspects of the business, including the history of the franchise, competitor analysis, territory opportunity, sales and marketing plan and staffing requirements as well as the financial elements of profit and loss, cash flow and balance sheet.
Choose with your head, as much as your heart
It is often said that when making major purchases people choose emotionally and justify logically. Relying on purely emotional factors can prove very problematic when choosing your ideal franchise, so use the tips provided above to make the decision making process more balanced.
Finding your ideal franchise can be a difficult task but, by taking care to evaluate yourself and your choices using the ten points outlined above, I hope that you will be able to find your perfect match and a business opportunity that will prove rewarding both personally and financially.