Leave no stone unturned! 5 questions to ask before you invest in a franchise
When researching franchise opportunities, it is essential to get insights beyond the standard facts and figures. While it can be tempting to focus on the financials, investing in a franchise is a long-term commitment. Building a strong working relationship with your franchisor is going to be crucial to your ongoing success, so you need to ensure that your values and expectations are aligned to avoid any surprises.
Ahead of The National Franchise Exhibition, taking place on 6 & 7 October at the NEC, Birmingham, here’s five questions you might like to ask to delve a little deeper.
What is your USP?
Once you know the basics – how long the brand has been operating, how many franchisees there are in the UK etc – it’s important to understand what sets each franchise opportunity apart.
Ask the franchisor what they see as their brand strengths or USPs (unique selling points). They should be able to summarise these succinctly, and explain how they communicate these to potential customers too!
This will help you to identify where the franchisor’s priorities lie, how clearly they are able to articulate their vision for the future and where the brand sits within their specific market.
What does a typical day look like as a franchisee?
If you are considering becoming your own boss, you will probably have an idea of what you want your working life to look like.
If you are interested in being an owner operator; will the training and support offered by the franchisor plug any skills gaps and enable you to jump straight in? While sector experience isn’t essential for many franchise opportunities, asking this question will help you understand what specialist skills you might need to learn.
Perhaps you have ambitions to scale at speed and build a multi-unit portfolio. If so, you need to gauge if day-to-day commitments would make this a realistic goal – whether that is straight away, or after one/two/five years of operation. Finding out what percentage of their time the average franchisee spends working on their business, rather than in their business is a good starting point.
What costs do I need to consider?
Over and above the initial franchise fee, what other costs and commitments do you need to account for? This could include leasing premises, refurbishment, equipment, or marketing and promotional costs. This will help you to calculate when you can expect to achieve a return on your investment.
You will generally be provided with financial projections, but remember these are not promises of performance. The success of your business will depend on your commitment and skills, as well as external factors. It can be useful to ask for past performance of existing franchisees so you can see what a typical year one, three and five looks like to help you identify whether a specific franchise will help you achieve your financial goals.
How would you describe your organisation’s values?
Not only is it crucial to understand the core values of the brand, but also to see some examples of this in practice. If you are passionate about giving back to your local community, for example, is this something that the franchise network is committed to and weaves into the daily workings of their businesses?
How do you support your franchisees when they are ready to move on?
Although it may seem premature to talk about what happens after your franchise term before the agreement is even signed, you can’t skip over this point. It is worth asking what their franchisees typically re-sell their businesses for, how they will assist you, or whether you can gift your business to a member of your family.
No matter where you are on your entrepreneurial journey, attending a Franchise Exhibition is the perfect opportunity to immerse yourself in the world of franchising and learn more about your options.
Visit The National Franchise Exhibition at the NEC, Birmingham, on 6 & 7 October to meet the teams behind leading brands, gather essential insights during a packed programme of 50+ talks, and get free, expert advice from franchise lawyers, funding providers and the BFA.
With opportunities in food & beverage to care, education to fitness, and investment levels starting from less than £10,000, there is a franchise to suit all budgets and ambitions.
Find out more about what’s going on and book your free tickets at FranchiseTickets.co.uk