1. Get sufficient information (including accounts) before purchasing a franchise.
What is the franchisor providing?
- Equipment, stock and stationery?
- Advice and assistance in locating and securing business premises?
- Initial training and assistance in launching the business?
- Is there an operations manual and can you view it prior to purchase?
- Have there been any failures in the franchise network, if so how have they been dealt with?
2. Research the market thoroughly including location, disposable incomes, the product and buying trends, which can all affect your projections.
3. Talk to existing franchisees to gain an insider perspective on the business. Ensure the franchisor provides you with a full list of its franchisees – not just a cherry-picked few.
4. Take advice as much as possible from the British Franchise Association and professional advisors such as banks, BFA-affiliated lawyers, accountants and business advisors.
5. Consider your strengths and weaknesses and whether the franchisor provides any training and support to help you improve your skills.
6. Check the franchise agreement. Is it ethical? Make sure that you obtain legal advice from a BFA-affiliated legal-advisor in relation to your franchise agreement before you sign it. Ensure that any promises made by the franchisor are in writing and attached to the agreement.
7. Get everything in writing. If your franchisor will only discuss things in person or on the phone then send an email immediately after your conversation summarising what was discussed, to create a written record.
8. Make sure you are fully aware of the terms and conditions you are required to adhere to and that you understand their implications and your exposure under them.
9. Where possible, resolve disputes informally. This is normally more cost-effective than going through the courts. Always seek legal advice on alternative dispute resolution procedures before you file a claim form with the court.
10. Have an exit strategy. Make sure you and your franchise agreement have an exit strategy. This is usually the sale of the business. Check:
- Which types of franchised businesses have the best resale value?
- Does the agreement deal with a situation where you die or are permanently incapacitated. Have you made proper arrangements within your will?
- Establish at the outset your long-term goals. Do you hope to eventually sell your business or pass it on to a member of the family?
