Buying A Franchise Opportunity & Getting It Right!
Buying a Franchise offers many benefits over starting a business on your own. The franchisees benefit from the training and ongoing support that they receive whilst trying to make their business successful. People starting a business on their own often have no help or guidance in the day to day running of the business!
The franchisees receive guidance on location, fixtures and fittings, marketing and operation of the business model. This guidance is based on years of experience the franchisor has gained not only from running the business model but also from advising other franchisees.
Buying a franchise business is at least a five year commitment and as such should not be taken lightly. It is important to make the right lifestyle choice rather than basing the decision to buy purely on profitability of the business model.
A prospective franchisee should always look at the market trends to ascertain whether the need and requirements of the products of the franchise opportunity are predicted to grow or decline over the medium and long term. Getting advice from an experienced accountant can help in this respect.
What makes the franchisor’s products better than the competition? Is the franchisor continually investing in improving the products to reflect changes in latest trends and requirements of the customers? Analysing which products have been changed and new ones introduced over the last five years will help in this regard.
How are the other franchisees faring? Prospective franchisees should speak to others who have already bought the franchise to ascertain whether the business model works and it would be suitable for them. This course of action will reveal information that the franchisor does not usually have in his marketing material!
The territory is just as important as the franchise model. Not all franchises work in all territories as each area has their demographics and buying patterns. Decent knowledge of the local area is invaluable and the choice of which type of franchise business to buy should be made with regards to this information.
The franchise agreement is the cornerstone of every franchise and as such should be scrutinised carefully. Many franchisees wrongly make the assumption that they have to accept the franchise agreement in its entirety if they are to buy a franchise business.
In reality a letter of variation can be created fairly easily which deals with the individual requirements of the prospective franchisees without changing the actual franchise agreement. The way this works is that the letter of variation can say that certain clauses in the franchise agreement do not apply in this case and certain clauses are to be treated differently.
It is important when seeking advice that experienced lawyers and accountants are used rather then choosing somebody who has just qualified. They will know through dealing with real cases how to handle the franchisee’s particular requirements and still keep the franchisor happy.
Making the right choice of franchise that is based on individual skills as well as the individual requirements of each particular territory should serve to ensure that the business model works both in the short term and the long term.