If you have the investment, but you do not have a profitable and workable business idea, then buying a franchise might be the best option for you. Currently, the UK has more than 900 franchises operations with an annual £13.4 billion industry turnover.
Running a franchise as compared to starting a new business from scratch is far less risky; it has lesser chances of failure and higher chances of long-term success.
However, if you a newbie at franchising, there is a lot that can go wrong! The following tips would help you make a sound decision:
1. Research and Seeking Professional Help:
When selecting a franchise, you cannot go with only what your heart says. You have to ground your ideas with fact and figures. You would have to make sure that you are sure about all the legal and other requirements of the Franchise that you are going to select.
You can visit events like Franchise Exhibitions, or seek professional help from the Quality Franchise Association’s professionals. One of the top tips to eliminate the chance of getting scammed is to ensure that your prospect franchisor is a part of the Quality Franchise Association.
2. Talk to Other Franchisees:
Based on professional help and research information- if you think that investing in a particular franchise is a smart decision, make sure that you talk to other franchisees. They will provide you with a clearer idea about the actual pros and cons of investing in a new franchise UK.
3. Plan the Finances:
If you have a limited budget, you would have to manage it very wisely. With your own business, you have the leverage of starting small and then reinvesting the profit to expand the business. However, in franchising, you most probably require a significant initial investment to purchase the Franchise and to meet their standards.
Underestimating the investment might cause a lot of trouble; so, think wisely and plan carefully before you step into franchising. To minimize the risk of failure planning and evaluating all the prospects is essential, especially for first-time franchise buyers. Learn these tips for financing a franchise.
Top Considerations to Keep In Mind before Buying Your First Franchise
After your thorough research about the available franchising options, and after you have decided the Franchise that you want to invest in. Do not think that your research work has ended? Unfortunately, No! There are still tons of questions that you should ask yourself, you make the final decision:
- What would be my role in the daily activities of the Franchise?
- How will I earn my income? Daily wage, weekly or monthly?
- Do I have the required skills and experience?
- Am I ready to take the responsibility?
- Am I flexible to learn and adapt to the franchisor’s requirements?
- Do I have the knowledge to make the Franchise successful in my region?
- Would I be able to afford professional help in the beginning?
- What would be my game plan if the Franchise does not succeed?
- Would I choose the same franchise (or related to the similar field) next time?
Apart from the above questions that were more related to your self-development and understanding, there are a few market-related questions that you should be able to answer:
- Do you understand customer demographics?
- Do you know the demands of your target customers according to their regional and cultural demographic?
- What would be the SWOT analysis (Strength, Weakness, Opportunity and Threats) of the Franchise according to the location?
- Are you fully aware of the competition?
- Would you have to make extra efforts to get a competitive advantage?
- Would you have to build the need for the product? Or the demand already exists?
- Is the product or service seasonal?
- Would you be able to meet the financial goal?
If you feel that you are not sure about the answers to these questions, it is a smarter idea to wait before you buy your first franchise. You should time to research further about it or seek professional guidance.
It is also essential to be fully aware of what you should expect from the Franchisor. Have a clear discussion will the Franchisor and before making the final decision, be sure able a few critical questions like:
- What would the Franchise package include?
- Would the Franchisor offer initial training and support?
- How long would the Franchise Agreement be?
- What is the Franchise Agreement renewal process?
- Would you have to bear any renewal fee?
- What restrictions would you have to follow or standards you would have to meet, in terms of product, price, packaging, product marketing, etc.?
- On what bases can the Franchisor terminate the Franchise Contract?
- On what conditions can you terminate the agreement?
- Can the Franchise be handed over, resalable, transferable?
Buying a franchise such as a coffee franchise, food franchises UK and part-time franchises is a fantastic investment opportunity, but having insufficient legal knowledge can put you in a lot of trouble.
If you are not sure about the legal requirements or the clauses that are a part of the Franchise Agreement are not clear to you, then it is highly advised that you should seek professional help.
A Simplified Guide to Buying Your First Franchise
For first-time buyers, the procedure might seem a little nerve-racking. So, the following steps would be helpful:
- Plan, evaluate and select the Franchise
- Consult legal and franchise consultant
- Meet the Franchisor and its other Franchisees on the Discovery day
- Discuss all the requirements and benefits
- Seek professional guidance to get a better understanding of the Franchise Contract
- Obtain the essential permits and insurance
- Sign the Agreement
- Get the necessary training
- Start operating
The procedure might differ according to the nature and requirements of the Franchise. Seeking professional help on every step of the buying procedure might cost a bit; however, it can significantly reduce the risk, the chances of mistakes, and increase the chances of success in the longer-term.
Nonetheless, there is no shortcut to success in franchising; you would have to work hard and dedicate both time and money to ensure long-term success.