Whether you are a franchisor or a franchisee or planning to franchise your business in the future, with our experience in advising both franchisors and franchisees we can offer you practical and realistic advice as to the pros and cons of franchising. A good franchise will operate like a partnership - there must be sufficient in the pot for both franchisor and franchisee and a tried and tested business system which has been operating for some while.
If you're tempted to buy a franchise:
- Make sure the franchisor has a successful business model which has been running successfully for some time.
- Seek advice from the Accountancy + Business Advice Centre and a decent lawyer beforehand.
- Fully understand the franchise agreement and the restrictions it will place on you. Rather than help the remaining franchisees or spend the massive unspent advertising fund the franchisor in the 28 franchise example above is suing the 25th ex-franchisee for trying to eke a living out of the remaining customers!
- Recognise the business might be taken away from you in the future as has happened in HB more than once.
- Recognise also your area might be split in the future.
- Be careful of the amount you finance which could place you under unsustainable financial pressure. I've seen huge sums paid for franchises in very competitive business areas.
- Compare the cost of the franchise with starting a business from scratch - just how much of a brand are you acquiring?
If you're thinking of franchising your business:
- Seek advice from the Accountancy + Business Advice Centre and a decent lawyer beforehand as well as a franchising consultant
- Make sure your business is successful already and suitable for franchising
- Carefully think through what benefits there are for potential franchisees
- Ensure you have the necessary resources beforehand as setting up a franchise properly is expensive
Proper preparation and planning prevent pretty poor performance!