Get Your Affairs In Order! 4 Essential Preparations Before Becoming A Franchisee
Franchising is widely believed to be a safer option when it comes to launching a business. It’s easy to see why: an enormous 93% of franchisees claimed profitability in 2018. In contrast, of the 660,000 new companies registered in the UK every year, 60% go bust within three years.
But that isn’t to say franchising is easy… And it’s perhaps for this reason that franchisors perform diligent checks ahead of any new member joining the ranks.
So, to help get you ready for your journey into profitability, we’ve provided our breakdown of the four essential preparations you need to make before becoming a franchisee.
1. Attend a discovery session
A discovery session is your initial meeting with a franchisor. Devour any resources their franchise business may have before you arrange one. Make sure you understand their culture and map out exactly how you intend to progress within their infrastructure.
Start by reading case studies to get an idea of how that franchisor defines success. Additionally, make a note of any marketing and financial support they have that you can rely on – these will form the basis of your questions.
When you’re there, appear engaged. You’ve chosen this franchise to escape the rat race and lead a business, so explain what you intend to do for them and how that ties in with your ambition.
2. Contact other franchisees
Case studies present only one side of a business. Often, it’s more constructive to hear from the voice of the people – namely middle-ground, average-earning franchisees.
These guys will give you a thorough understanding of what it’s like to work in a franchise day-to-day. While the best franchise opportunities strive to be transparent with their success stories, they often tend to be largely positive and may prevent you from picking up on genuine criticisms of the model.
Try and search for franchisees closest to your circumstances, as well as those who have grown into multiple territories or employ staff. Ask how the franchise helped them achieve these things.
3. Prepare a business plan
Next, demonstrate your commitment to success through a business plan. A business plan is where you illustrate how you’re going to make a profit for both you and the franchisor. Banks will also ask for a business plan if you require a loan for your buy-in.
Start by performing a SWOT (strengths, weaknesses, opportunities and threats) analysis and explaining how the threats can be addressed by your skillset alone. Next, conduct competitor research and highlight the gaps in the market that justify your proposed franchise business.
Include marketing opportunities that will help leverage any awareness your audience has. Factor in social media strategies, advertising and local outreach. Be as thorough as you can, referencing clear overarching aims throughout.
4. Secure your buy-in
Finally, you need to have your loan approved in order to buy a franchise. Depending on the franchise you choose, they may be able to recommend a bank who they know offer favourable loans to franchisees. If not, look for franchise-specialist banks.
HSBC, for example, have a franchising team that’s dedicated to helping you work out the costs ahead of purchase. Whether you’re borrowing enough to purchase a lot or simply cover vehicle costs, their specialists tailor loans to your needs and ambitions.
Franchisors should support you at this stage, as they’ll be experienced in securing loans for franchisees. If they show little interest or largely leave you unsupported, it may be worth reconsidering your chosen franchisor and restarting the process.
At Rainbow, we’ll be with you every step of the way. Our onboarding team are experts in mapping your ambition and talent to business goals that makes sense. We’ll recommend banks that are best suited to secure your loan and are committed to complete transparency between our HQ and franchisees.
We want entrepreneurs that are eager to leave the 9-5 for something more. If that sounds like you, get in touch today.