Top Ten Tips for Aspiring Franchisees*
1. Am I suited to going into business for myself?
Can I commit myself to working hard and taking all the responsibilities of running a business? Am I healthy and able to work hard and long hours? Do I want to invest my hard earned cash/capital into a business? Will I have the support of my family?
2. Check finance available to invest
Setting up a business is a risk, although franchising should minimise it, but you must be aware that things can go wrong and if you borrow money you may well be left with debts to repay.
You therefore need to be very comfortable with how much of your own money you invest and how much you borrow.
3. Research Franchising as an Option
Although buying a franchise is usually a lot easier than starting from scratch it still entails hard work and commitment. Understand how franchising works –
look at specialist franchise magazines and literature, search franchising on the web, and attend franchise seminars and exhibitions
4. Assess personal suitability and preferences for franchise type
It’s worth remembering that a good franchise will provide initial training so you don’t necessarily need to have previous experience - it's the type of work that you need to identify. Consider – your previous experience; have you managed staff; have you been involved in administration; what would you like to do and what are your strengths?
5. Identify suitable franchises within the right type and finance
Once you've decided on a particular franchise type, you can now narrow down the list of opportunities by finance. You can start by multiplying your ready cash by two as Banks will usually lend up to half of start-up costs and sometimes higher. This process will enable you to arrive at a shortlist of opportunities that you can start applying for.
6. Assess the Franchise/s
If you are buying a franchise, you are going to be working, selling and promoting the product or service for a long period of time. You can’t change or develop the product or service, so make sure that the franchise has long term appeal and its market is not threatened in any way. It is important that the franchisor can demonstrate a clear understanding of the future market for the product or service
7. Check out the Franchisors you’ve selected
Is the franchisor financially sound? Does a comprehensive operations manual support the training? Has the franchisor run outlets in similar areas to yours? How thorough is the training at the start-up stage and thereafter? How many franchises have they opened in the last 12 months? How many applicants do they reject?
8. Talk to Franchisees of your Choice
Ask for a full list of existing franchisees and speak to as many as possible. Are they happy with the franchise and level of support, for instance?
9. Confirm and Arrange Funding
For an established franchise the major banks will lend up to 70% of the start up costs, and for new franchises the figure is around 50%. Start preparing your business plan - this is a vital document for you and your lender and your franchisor will often help you with this – and cash flow forecasts for the first couple of years of the business, and be sure that you understand these figures.
10. Check Legal Agreements
Refer all legal documents to your solicitor. Once you and your franchise solicitor are comfortable with the terms in the franchise agreement you will arrange to sign the franchise agreement and make payment as required in the agreement.
*Adapted from whichfranchise.ie’s Step-by-Step Guide to Becoming a Franchisee
For further information and advice to buying a franchise in Ireland, please visit www.whichfranchise.ie