How to Buy a Franchise
Buying a franchise is, probably the safest route into self-employment. You’re investing in a proven business model, with the full support of an experienced franchisor, keen to provide all the support you need to be successful. You’ll be building a proven and valuable business asset that, at a time of your choosing, you’ll be able to sell.
Another great reason for buying a franchise is that you don’t need relevant industry experience. A good franchisor will provide you with all the necessary training you need.
It’s worth noting that, according to figures from the BFA, 93% of all franchises are profitable.
So how do you buy a franchise?
First, ask yourself some questions
Buying a franchise is a big decision. Assuming you’ve already decided that you want to be your own boss, when you’re buying a franchise, these are the essential questions you need to ask yourself:
- Have you got the money or will you need to borrow to buy? If so, how much and where from?
- Running a successful franchise often means long hours. Will it fit around your current lifestyle?
- Have you got the skills? Successful selling is key. So, are you comfortable making calls, meeting new people and building business relationships?
- What sort of franchise do you want to run? Is it business to business or business to consumer?
- You can find more information on how to choose a franchise here
Things you need to ask a franchisor
Franchisors charge fees for using their name, their business model and the support they offer. Usually, there’s a management fee and an advertising fee (that’s a contribution to national promotions run by the franchisor).
When you’re buying a franchise, you need to ask the franchisor:
- The basis on which franchise fees are calculated. This might be a flat monthly fee or based on your turnover or profitability. With the latter two options, that means the more successful you are, the more you’ll pay.
- The level of training and support you’ll get before you open for business. Training should tell you how to run your franchise, market your franchise and the challenges/opportunities of the industry sector you’ll be working in. Some of it should be classroom-based and some of it time spent with an existing franchisee
- The level of structured support once you’re up and running. It should include both technical and administrative i.e. marketing, finance, invoicing, IT and regional management.
A final point – the fee/support equation is all about value for money. Don’t look for the franchise with the cheapest fee. It might look like a bargain, but it could mean a bargain basement level of support.
The next stage
You’ve assessed yourself, perhaps undertaken some initial research, and you’ve done the sums to see how you’ll finance the purchase. The next stage in buying a franchise is to decide what king of franchise appeals to you. A good place to start is by visiting franchise exhibitions where you can talk face-to-face with franchisors. Or, if you prefer, there are plenty of online franchise websites with loads of information on individual franchises. Create an initial list, then whittle it down to the ones you really like the look of.
And then it’s time to pick up the phone and call them for an initial chat.
Published on: 29 Apr 2020