Excited About Buying-Into In a Franchise? These 6 Tips Will Help You Avoid Failure
Buying-into a franchise means becoming a party to a contractual relationship in which you (the franchisee) pay an initial fee as well as regular royalties to a franchisor so that you can do business in the name of the franchisor. For instance, to open a branch of KFC in your neighbourhood, you will need to enter a contract with KFC (the franchisor) wherein you will agree to pay an initial fee and regular royalties, as well as strictly follow KFC business practices. In exchange, KFC will give you the rights and licence to use their logo, recipe, and everything else needed to do business as a KFC outlet.
Some of the biggest international franchises according to https://www.pointfranchise.co.uk/ include, Burger King, Circle K, McDonalds, Hertz, KFC, Subway, and 7-Eleven.
For most entrepreneurs looking for a safe business model to invest in, the franchise business model on the surface seems like a guaranteed recipe for success and in most cases it is. But in the business world, what has worked for one entrepreneur in a particular location won’t necessarily work for another in a separate location regardless of how big or loved the franchise is.
So before you dive headfirst into the prospect of sinking all you have into buying-into a franchise in the UK, take the following into consideration:
- An Upcoming Franchise is Rarely a Good Idea
Instead of investing in a well-known and established franchise, you might think the market is already saturated and that you’ll be better off investing in a newcomer. While you might have a point, something else to consider is old franchises that have been around for decades will likely still be around for decades more to come and will maintain their positive reputation.
On the other hand, a trendy new franchise that has taken the world by storm can disappear just as suddenly as it appeared. It’s wiser to invest in a franchise that has proven its staying power over the years and survived changing trends and economic climates.
- Don’t Be Blinded By Positive Press
Winning all the awards and being at the top of industry rankings is not concrete evidence that a franchise is successful. Rather, it means that its PR team is doing a fantastic job.
If you are going to invest in a franchise, be sure to dig deeper than the positive press and social media accolades, and look more into their actual figures and data regarding performance in various branches, especially branches operating in a market similar to that you are targeting.
- Get Feedback from Customers Patronising the Franchise
If you do open up a franchise, customers will determine its eventual success or failure. Since all franchise branches offer the same product in accordance with the stipulations of the franchise’s head office, it’s crucial you get a feel of how current customers of the franchise feel about their services. It is important you identify what customers and critics have to say about a franchise’s products and services before signing any legally binding contract with the franchisor.
You can get such information on message boards and discussion sites such as BlueMauMau
- Hang out in Franchise Outlets of the Business
If you intend on opening a Pizza Hut, best to spend some time in some of their branches and have a conversation with the manager or proprietor. This will provide you a real life picture of what you are getting into and will go a long way in helping you make a smart decision.
- Verify That There is Actually a Market in the Location You Have in Mind
Not all franchises can survive in all markets. For instance, a fast food franchise may struggle in an upscale area with high earning residents that are into healthy eating. So before choosing a franchise, verify that the people in your target market actually want or need what the franchise has to offer.
- Work with a Seasoned Franchisee Lawyer
Without an experienced lawyer that will provide you the guidance you need, you stand the risk of entering a legally binding agreement with the franchisor that will leave you wailing and gnashing your teeth for years to come. So before entering a marriage that you might regret, let a legal professional explain to you exactly what happens after you sign the dotted lines.
Bear in mind that when you become part of a franchise, the franchisor holds all the cards. You might own the building, but the franchisor owns the business and you are not allowed to run the business in anyway except how the franchisor dictates. To put it in simpler terms, how your business operates will be dictated by the whims and caprices of the franchisor and you must comply.
On the upside, your business will have the potential to thrive and attract customers thanks to the reputation and attractiveness of the franchise’s brand.