🕒 Estimated reading time: 4 min.
This month, we invited Dugan Aylen, Franchisee Recruitment Specialist at The Franchising Centre, to tell us about his experience in helping people make the right decisions when investing their time and money in a franchise business.
Over the past 16 years, he has spoken with thousands of people and has found that there are three main stumbling blocks which can seriously get in the way of people deciding to become a franchisee.
Check out his fantastic article below!
Income replacement
According to the 2018 bfa NatWest Survey, over 65% of people who signed a franchise agreement in the UK came from full-time employment. It’s no wonder that one of the biggest concerns is how an (almost!) guaranteed monthly income will be replaced when becoming a franchisee.
Franchisors have to be able to show a potential franchisee how they will be able to replace their salary, and how they may be able to exceed it when they have an established business. It’s also very important to understand the common reality that in the first year of starting any business, franchise or otherwise, income from profits won’t be able to fully replace a salary.
This is not to say you will not be able to draw an income from a new business. A good business plan will help to build this picture, and lending options should always be considered, as banks and other financial institutions are very keen on lending to franchise businesses due to their much higher chance of success.
The friends and family effect
One of the biggest hidden reasons that ideal candidates don’t end up signing a franchise agreement is from the pressure they feel from their inner circle of trusted advisors such as friends and family. Many people decide not to become a franchisee because they feel negative pressure from their spouse, parents, siblings or friends. This pressure has the effect of increasing the risk of fear of failure in the eyes of those they are closest to.
It’s almost impossible for a franchisor to overcome this kind of hurdle, purely for the reason that they are not aware of it in the first place.
Anyone seriously thinking of investing in a franchise should start to include those closest to them on that journey because, by including them, they will ask you the questions you hadn’t thought of, and pose some difficult questions you may have felt uncomfortable asking the franchisor yourself.
I don’t mean include them in every part of the process (visions here of a huge entourage attending a franchise meeting!), but keep them updated on developments and involve them more directly when you value another opinion, want another pair of eyes and ears or feel you need to be held back from rushing a decision because it all looks so great!
Marketing is confusing
Only 3% of the UK’s workforce are in a marketing role. My personal experience in talking to people considering a franchise shows that over 75% of them do not have any great background or experience in marketing at all, yet this is an absolutely fundamental aspect of running any business.
Due to this, one of the biggest reasons that people don’t end up investing in a particular franchise is because the franchisor was not able to adequately answer this must-ask question: “How do you help me get customers?”
For those not schooled or working in marketing, it is an extremely confusing and fast moving part of the business mix to understand (especially with the word 'digital' being included now!).
All franchisors need to have an exceptional and tested ‘marketing-in-a-box’ solution to attract new franchisees, and they have to be able to show this and explain the marketing process in a simple way.
If a franchisor cannot help you to understand how they help find customers or clients for their franchisees on an ongoing basis, then walk away. It’s not worth it.
Help is at hand
If you're new to franchising, or even if you've been looking for a while, it's always worth checking out the British Franchise Association (bfa) who are an ethical organisation helping to provide unbiased information about franchising to everyone.
At The Franchising Centre, we also help provide best advice to anyone involved in franchising, including both franchisors and potential franchisees, about the whole process of identifying the right kind of opportunities, and then narrowing those down to just one franchise opportunity that fits. In that sense, we consider ourselves effective business matchmakers helping to create great partnerships!
For more information about The Franchising Centre and the world of franchising, please click here.