The world of franchising today is incredibly diverse. It wouldn’t be an overstatement to say virtually every type of business and business model is franchised in one form or another. The financial service sector may have been a slow starter from a franchising perspective but has certainly now made up ground. Franchise opportunities exist in many diverse ‘white collar’ business environments. Below I’ve outlined some of the most important things you need to consider if you are thinking about becoming a successful franchisee.
- Know What it is You Want to Do
Before you go any further really consider what it is you want to do. At the end of the day, you’re buying a business and it may be worth assessing what skills you have that can be applied to being a successful business owner and your chosen franchise. Unfortunately, too many individuals often see themselves as franchisees of a particular brand because they have, in a past or present life, been doing exactly what the franchise offers.
Such people firmly believe that as a long-time professional they know all the ins and outs of the process, require minimal training and are already well on their way to instant success under a brand name. The reality invariably proves that there is always more you can learn and processes that can be improved upon.
There is a distinct benefit for professionals who are trading on past work experience when embarking on a franchise opportunity. Individuals engaged in ‘the business’ that the franchise embraces can certainly make excellent franchisees and can often quickly create a solid profitable franchise.
- Know They Have Proven Systems
The advantage a franchise has over starting up your own business is that it is based on a proven business model, that’s been shown to work. The most successful franchises are built on established processes. If the franchise your considering can’t demonstrate these, from payroll to marketing, then you need to tread with caution. A key question would be – just how long has the franchisor been franchising their model?
- Know Your Earnings Potential
Evaluating the earning potential of a franchise can be difficult, especially if it involves territorial exclusivity. Naturally you should request as much financial information as the franchisor is able to supply. In addition, ask the franchisor to introduce you to existing franchisees so that you can seek out first hand operating experience. Make sure that you talk to a cross section of franchisees, as we say the good, the bad and the ugly!
- Know You’ll Be Supported
Just because you are awarded a franchise it doesn’t mean you have acquired a silver bullet for success. The success of your franchise is very much in your hands, however franchisor support will be a key ingredient in your success. Therefore ensure that you understand the franchisor’s training and support system and especially their ‘after-launch’ support and mentoring programme.
At The Interface Financial Group, we place a lot of emphasis on supporting our franchisees, from extensive induction programmes to managing the due diligence process.
- Know They’re Here to Stay
Truth in time tells all…that’s an idiom to live and die by in franchising. A franchise that has stood the test of time, economic peaks and troughs, must be doing something right. Indeed, it speaks volumes for the processes and business models the organisation has put in place.
With so many new franchises popping up all the time, it’s hard to say how many will survive and how many will crash and burn. Check out their history.
- Know the True Costs of Being a Franchisee
The initial cost of setting up a franchise can be quite significant. It’s important to know just what you’re paying for and what the total start-up cost is going to be. Review the franchise agreements and watch out for hidden fees in addition to the royalty payments, such as required marketing fees or training. Also remember that budgets often take longer than expected to work, so always allow extra time and cash for the start-up period.
- Know What Other Franchisees Think
Ultimately when you’re buying a franchise, you’ll most likely speak to the franchise sales people and others from the franchise’s HQ. All too often they’re focused is on getting you on board. Therefore, as suggested above, we always encourage prospective franchisees to speak to other franchisees and wherever possible to actually meet with them, especially if they have a franchise format that is open to the public. This enables a prospect to see a franchise in action – that’s one of the best information items available.
- Know you’re Comfortable with the Franchise’s Rules
Great franchises are built by those who can put to use their entrepreneurial flair, particularly in areas such as marketing and product/service placement, while operating within the organisation’s systems. Some franchises are very strict about just what you can and cannot do, while others are more liberal. It’s important to be sure you’re comfortable with the degree of freedom your particular franchise offers. If you are a consummate entrepreneur, franchising may not be for you as you probably like to re-invent the wheel several times each month – definitely not the franchise approach.
For the past 20+ years, David Banfield has been at the helm of The Interface Financial Group, steering it from an invoice discounting company into an international invoice discounting franchise and license operation.
Before growing Interface, Mr. Banfield was involved in many facets of the credit and banking world. His career spanned many years in ‘offshore’ locations, working in the international trust and banking arena. His professional qualifications cover both Banking and Credit Management.
With in-depth experience gained with The Walter Heller organization, based in Chicago, he gained valuable commercial finance and factoring knowledge, which was of great value in styling the Interface franchise operation. Currently he heads up the global development work for the franchise and license program.