How do I know if my franchise will succeed?

It’s one of the biggest questions that any would-be
franchise owner has – quite simply, will my franchise succeed?

 Let’s start by looking at the figures. The British Franchise Association conducted research with NatWest in 2018 which found the franchise industry is accelerating its growth and already contributes a staggering £17.2 billion to the UK’s GDP every year. 

It employs 710,000 people and 93% of franchisees are profitable. Furthermore, fewer than 1% of franchises close in any given year because of commercial failure. Compare this to figures for independent SMEs, of which 50% close within five years.  

The advantages of a franchise:

Naturally, there are pros and cons to starting your entrepreneurial journey as a franchisee or an independent (which will be addressed in aseparate article). Some of the arguments for choosing a franchise are:

  • With a franchise, you buy into an existing business with an established brand, a recognised trademark and a tangible success record

  • You can review all of the available financial figures and sales data for that franchise to help you make an informed decision

  • Your chosen franchise will already be doing and will continue to do central marketing which will benefit you

  • Your chosen franchise will already have a proven operational model covering everything from supply chain to logistics, sales to marketing and finance to HR

  • You will be provided with training and a support network which continues throughout the term of your franchise agreement

  • You enter into a relationship, often referred to as a “marriage” with your franchisor, your success is their success – you’re never without somewhere to turn if you have an issue with your business

  • Some franchisors will offer other services which you wouldn’t receive if you were running an independent business, such as mentoring, external business coaching, help with your accounts and telesales support

  • As a franchisee you’re part of a larger network of other franchise business owners and can provide each other with advice and guidance

The franchise model can be extremely profitable for entrepreneurs who are willing to put the time, effort and dedication into building their business, whether they are looking for a small and part-time franchise to operate around their family and other commitments, or a larger full-time franchise or multi-territory investment. 

Finding the right franchise

The key to finding a viable franchise is to do your research carefully beforehand and make use of all available data sources. For example:

  1. Request an information pack/brochure from the franchise that interests you

  2. Carry out your own industry research using a model such as PESTEL analysis (Political, Economic, Societal, Technological, Environmental and Legal) to assess the opportunity from these crucial angles. Look at the growth potential and the existing competitors in the sector. Be as objective as possible and really challenge your thinking if you find that “information bias” is kicking in with a franchise you know that you’re keen on. Ask a trusted colleague or friend to help you.

  3. Engage with your proposed franchise as a customer. How is your experience? Is the website good? Are the prices right? How is the service? What are other customers saying?

  4. Interrogate the financial data provided by the franchise to understand the returns. What is the total initial investment and ongoing running costs? What are the projected returns? Work your ratios!

  5. Consider shadowing another franchisee in a different territory. 

Look at yourself

When it comes to building a thriving franchise, there are two sides to the success coin. The first is finding a high-quality franchise
with potential that invests in its business model, marketing and franchisee network for the long-term. The other is yourself! So, answer:

  • How much time am I willing to devote to this?

  • What are my ambitions and how much do I want this?

  • What are my strengths and weaknesses (again, ask a trusted
    contact to help you with this)?

  • Am I willing to retrain and to learn new things?

  • How big is my budget?

And so forth. Attend franchise discovery days, network with other franchisees and generally gather as much information as you can about the franchises you are interested in. Consider the facts, along with your own position, so that you can create an opportunity shortlist and analyse it objectively.

The time and effort you put into your franchise research will eventually pay off and ensure that if you buy into a franchise, you buy
into one that meets your requirements and is therefore much more likely to help you achieve your goals. 

If you’d like further information about becoming part of the PGH Beegone family, please get in touch with us:

Tel: 01483 387414

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