Begin at the beginning

If you’re just discovering franchising as a concept of self-employment and you’re starting to look into the myriad of options on offer, it can be tempting to blindly look through every website directory you can find.
   
But before you do that there are some simple steps that can put you in a much stronger position to thrive as a franchisee when you do take on your own business. So before you spend hours trawling franchise sites, spend a few minutes reading this and put yourself firmly in a place to maximise your chances of success.
   
‘Honesty is the best policy’; this old adage should be at the forefront of every prospective franchisee’s mind from the outset. And it should encompass everything that informs your decision on which brand to invest in. In this context, this means honesty with yourself. There’s plenty to consider, which is why you should be taking your time when buying a franchise and think about the following.

Your skill set
Take time out to list what you bring to the table. Franchising revolves around transferable skills – because a good franchise offers substantial initial and ongoing training and support, the overwhelming majority are suitable to people with no direct prior professional experience in whatever industry the franchise is in.
   
So consider your top skills – which might be sales, administration, business growth, getting hands-on in a business, marketing, people management, or networking. Think carefully about them. Finding a business that plays to those strengths will improve your chances of success.

Your personality
The type of person you are can be crucial to your business’s outlook. Are you outgoing or introverted? What are you passionate about? Looking honestly at your own traits can give you good insight into the type of operation you’re likely to be successful with. Combining your personality traits with your skill set can give you a powerful indicator of the franchises that are right for you.

Driving force
Think about what kind of operation you want to run, and why. Do you want to be hands-on, or a business manager and developer? Out on the road or working from home? Is potential profit the most important factor in your decision-making, or is a better family balance higher on your priorities?
   
Second, take time to understand what’s driving you to want to become a business owner. Are you tired of working long hours for the reward of others, is it succession planning for your kids, to be a part of your local community, to have control of your own professional life, or to take home more money? Understanding your motivation is important in order to determine the franchises on the market that can give you what you’re looking for.

Finances
Work out which franchises you can afford. There is a huge range to suit almost every budget, from a few thousand up to hundreds of thousands, but before you fall in love with an idea it’s important to know the ceiling of your liquid capital combined with any funding you can access. To calculate that, work out how much you personally have available (and are willing) to invest in the franchise; then consider your funding options, which can add substantially to that figure. By far the most popular option is bank lending – banks like the franchise model because they can access historical data from already-trading franchisees – with other sources including family and even franchisors, a few of which will finance the cost of starting up over a period of time for the right franchisee.
   
Bfa member franchises are looked upon favourably by the major banks, because they understand the strict criteria involved in gaining bfa membership – which includes proof of the financial sustainability to support a network properly, and evidence of previous franchisee success. For franchisees of such reputable, ethical franchisors, banks will typically lend up to 50-70 per cent of the start-up cost, depending on how long they’ve been trading. Of course, regardless of the brand, you’ll still need a strong business plan to gain bank funding.
   
To give an example, if you have £20,000 in liquid capital to invest, with an established franchise in good standing with the banks you can potentially take on a business with a total start-up cost of approximately £65,000 (around 70 per cent bank funding on top of your £20,000). For a newer brand, it might be more like £40,000.
   
Doing the maths gives you a clear idea of the range of franchises that are realistic for you, financially speaking. And remember to consider working capital in the early days of the business before you’re turning a profit.

Your circumstances
Running a franchise is a serious proposition. You must take your personal life and the circumstances of those around you into consideration; discussions with your partner and/or family are crucial, you will need their support when you take the leap into self-employment and many franchisors will want to see that you have it.
   
Think about what you want to get out of the business and how it might impact those around you.

Some franchises, at least in the early days, require more than a 9-5 undertaking, while others are set up to appeal to parents and fit perfectly around a young family and the school run. Be prepared to keep up with the business demands and know that you can do so around your other commitments.
   
Best chance of success
So, before you start to send off for prospectuses or spend hours searching online, there’s plenty to consider if you want to give yourself the best chance of success as a franchisee. It’s worth repeating time and again: buying a franchise is not a decision that should be rushed. It’s a legal, financial and emotional commitment – and one that could change your life for the better if you approach it the right way. A long, hard look in the mirror is a good first step.

Further information
www.thebfa.org