How to avoid franchise pitfalls
Article by Aspray
Do you know how to spot a pitfall in a franchise? Or how to determine if you’re buying into an ethical franchise? As a prospective franchisee it is essential to know what you should look out for when investing in a franchise and how to avoid buying into a franchise that isn’t for you. In this exclusive article for whichfranchise, Aspray share their expertise:
Research, research, research!
Before you dive into a huge financial commitment it is vital to gather as much information as possible to help towards a fully informed decision. Remember… do this before you’ve handed over your money! The simplest way to research the franchise is typing in the company name on a search engine to discover the industry and the service that they offer. Any concerns that you may uncover during research, you should write down to discuss with the franchisor in the early recruitment stages.
Look for franchises who are members of the BFA
A great way to start your initial research is looking only at franchises that are members of the British Franchise Association. “The BFA is the voluntary self-regulatory body for the UK franchise industry, with a standards-based approach to membership.” In order to gain a full BFA membership franchises are tested against the structure of their business, relationship and support between the franchisor and franchisee, their system and finally their success as a franchise.
You can be assured that franchises who are BFA members are committed to the principles of ethical franchising and their business model has been examined. Being a member of the BFA is also favoured by many high street banks and prospective franchisees are more likely to secure the funding they require for success.
Talk to the franchisor
Top franchisors will provide you with an in-depth insight into their business model before any form of payment is taken. An ethical franchise will be honest about the work you will have to put in to reach your target earnings. On the other hand if franchisors offer a ‘get rich quick’ attitude, it is more than likely too good to be true. It is important to take it slow and don’t rush into (or be pushed into!) buying a franchise based on instant income which will more than likely turn out to be a false promise.
Study the recruitment process
Buying a franchise is not as simple as handing over the franchise fee and signing the agreement. Top franchises have rigorous recruitment processes in place to make sure they choose the right person for the territory. Top franchises will have several steps within the recruitment process in order to protect their business integrity and maintain the high standards of chosen franchisees. On the other hand if a franchisor is pushing you into buying a franchise with limited information provided, this could be a warning sign of a franchisor who just wants your money.
Talk to existing franchisees
Top franchises will offer you with the chance to speak to existing franchisees in the network. Talking to franchisees already in the network can be a valuable experience as they have been in your position. They can be honest about the positives of the franchise as well as the barriers you may face. If franchisors don’t allow you to speak to any existing franchisees, they may have something to hide and buying into this could be a mistake.
Check the franchise agreement
The franchise agreement should cover all aspects of the business. It would be beneficial for you to hire a franchise lawyer to check the agreement before any decisions are made. Speaking to a franchise lawyer would be beneficial as they understand what to look out for and can point you in the right direction.
When you are considering purchasing a franchise, these steps can help you to avoid pitfalls and help you avoid franchises that don’t meet your needs.
Do you want to become a part of a franchise that is committed to the principles of ethical franchising? It could be time to secure your place on an Aspray franchise discovery seminar to gain an understanding of the extraordinary business proposition.
For more information on Aspray or to ask them questions about the above topics, please view their profile here and fill out the short form at the bottom of the page.
Last Updated: 27-January-2016