Partner Article

The Do’s and Don’ts when considering starting up a franchise

RBS director of franchising, Dave Williams, advises on the do’s and don’ts to consider when starting up a franchise

Do’s:

• Obtain a full list of franchisees ensuring the numbers are the same as that used in their marketing material.
• Speak to as many of their franchisees as possible about the franchisor and their general support provides.
• Visit existing franchisees to assess first hand how the franchise operates, it’s demands and whether it will be right for you.
• Ensure you have, or can access sufficient capital to start and develop the business. You will need at least 1/3 of the start up costs for an established franchise and ½ for a less proven business.
• Assess the value for money of the initial package and ongoing fees.
• Assess the share of profit to ensure it is equitable.
• Have the legal agreement explained to you by a British Franchise Association affiliated solicitor. It is unlikely to be changed.
• Assess the brand, product and/or service to ensure there is a market for the offering.
• Complete a business plan before you start. You will need to assess how the business performs against this plan. If you borrow the bank will want one prepared.
• Take a critical look at the training. Is it sufficient to start you off in business

Don’ts:

• Sit back and wait for business to come to you. Just because you operate a franchise does not mean to say you do not have to market your business

• Underestimate the demands on your time and the impact running a business will have on your family and social life.
• Exclude your family when considering buying a franchise.
• Forget to ask existing franchisees whether their actual performance is in line with the franchisor’s projections. If they are not ask why?
• Forget to ask existing franchisees what the support from the franchisor is like.
• Underestimate how long it may take to find a good retail site, when required.
• Forget to assess the competition.
• Forget to talk to an accountant about the financial projections and cashflows.
• Forget running any business has risks. There are still some in franchising, just that generally they are reduced.
• Forget to seek guidance from RBS

This was posted in Bdaily's Members' News section by NatWest and RBS .