Tips for franchisees

1. Do your research

  • Ensure that you have chosen the right location for your franchise.
  • Thoroughly investigate the competition within your chosen area.
  • Choose a business sector you will enjoy working in.


2. Evaluate the franchisor

  • Assess the levels of training and on-going support provided.
  • Compare different franchises within the same industry.
  • Request information on the franchisor’s financial performance.
  • Ensure the franchisor has an acceptable disclosure document along with set guidelines.
  • Understand exactly what is required to join the brand.


3. Consult other franchisees

  • Speak to as many other franchisees within the brand as possible.
  • Observe existing franchisees in operation.
  • Ask them about their financial progress and whether their expectations have been met.


4. Consider the financial implications

  • Find out how much finance is required to set up and run the business.
  • When applying for finance, understand that you may be asked to contribute up to 50% of the investment amount.  This may mean putting up your own assets as surety.
  • Make sure that the business will provide an acceptable return on your investment.
  • Set budgets and estimate the cost of overheads and expenses, particularly in your first year.


5. Be aware of how running a business will affect you personally

  • Select a franchise that you can relate to and are interested in, since you will have to work long hours and have to capitalise on your own strengths.
  • Ensure that you have the support of family and friends.
  • Do not expect to make a profit in the early stages.


6. Get professional advice

  • Consult a legal franchise expert before signing the agreement.
  • Seek the advice of an accountant regarding the historical and projected figures.
  • Engage the services of a reputable franchising consultant.


7. Don't rush into a decision

  • Understand the obligations you will have to the franchisor.
  • Ask as many questions as possible.
  • Set clear objectives.
  • Avoid making emotional purchasing decisions.

 

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