Franchising advice from the bfa

How to choose a franchise

 

Franchising is essentially the permission given by one person, the franchisor, to another person, the franchisee, to use the franchisor's trade name, trade marks and business system, in return for an initial payment and further regular payments.

 

In a UK franchise industry currently worth £10.8 billion and comprising 781 franchised units (2007 Natwest/bfa Survey), how do you choose the franchise for you?

 

Choose bfa members

You should first consult the British Franchise Association (bfa) - the only independent accreditation body for franchising within the UK.

 

The bfa Franchisee's Guide (sponsored by Lloyds TSB) and free video 'Your Introduction to Franchising', (sponsored by HSBC Bank) provides a wealth of step-by-step information - more than 33% of franchisees buy this unique, independent guide before making their decision.

 

It contains many additional publications including Business Franchise Magazine and a full list of bfa members. bfa members are recommended as they have volunteered to be 'vetted' by the bfa and to abide by its codes and standards, based on the European Code of Franchising Ethics.

 

Members are assessed on:

  • Their day-to-day franchise business activity
  • The terms of the franchise agreement
  • The current and projected company financial position
  • The disclosures e.g. Director's financial records; the identity of their franchisees.
  • Members of the bfa are re-accredited on a regular basis.

The bfa also recommend you attend an accredited Franchise Exhibition - the best way to meet and initially assess many franchisors under one roof.

 

Consider your franchise

Consider the viability of your potential franchise brand product/service
How viable is your potential franchise brand product/service i.e. will it be easy to market or sell in your specific region?

 

Can the company provide evidence of a sound business with proof of at least one successful franchised outlet and no significant record of failures?

 

Cross Examine Yourself


How much time and financial commitment can you give? What are your expectations? Have you spoken to other franchisees to hear their experiences?

 

Franchising can be a great success


In relation to any other small business, franchising has proved to be successful, with 94% of units still operating profitable businesses 5 years down the line. It is estimated that more than 40% of small firms cease trading within 3 years (Ganguly 1985).

 

There is other evidence to suggest that franchises are less likely to fail than other types of small business organisations (Castrogiovanni Justis and Julian 1993).

 

 

But remember that franchising is not an easy option and will require investment of a lot of hard work and money, particularly in the early stages.

 

Be realistic


At the end of the day, you as the franchisee must be prepared to be realistic. Many franchisees have risked their home, savings and family relationships by investing in business, consumed by dreams of becoming successful business owners.

 

The secret is to err on the side of caution and do your homework - make your first call to the bfa on 01491 578049/50.


You can find out more information, and meet the bfa, at a franchise exhibition.

 

For more about the bfa click here.