 CAN YOU HELP? [Franchising] |
| Author: |
Post: |
|
|
Posted on 25th Nov 2008 at 08:08
I am looking at diversifying by purchasing a B2B franchise.
Any advice from fellow 4N members would be invaluable; such as pitfalls, areas to be wary of, and even, questions that I shuld be asking the franchisee and others.
I'm open to all suggestions!
|
   |
|
|
Posted on 25th Nov 2008 at 08:35
Contact the British Franching Association www.thebfa.org/
They run regular seminars (unfortunately the one this week in Birmingham is full) and are extremely knowledgeable on what Francisees should be looking for.
Ian Hudson
Copyzone Archiving Ltd
(www.copyzone.co.uk)
Mob: +44 (0) 7817 778870
Off: +44 (0) 1279 726169
Marketing Assistant - Bishop's Stortford
Area Leader for Essex - Groups starting in 2009
|
| |
|
|
Posted on 25th Nov 2008 at 08:41
Thanks Ian, the franchise I've found was through them, but it's a useful tip. I'm going to a free seminar organised by NatWest, but suspect it could be a glorified commercial.
|
| |
|
|
Posted on 25th Nov 2008 at 10:17
I went to one of those seminars and it was a great intro to franchising and to the pitfalls that await you if you don't follow good advice.
It certainly wasn't an advert for NatWest. They did make their material available but the bulk of the seminar was just about franchising in general, what makes a good franchiser, how to select the right one for you etc. They even had some successful franchisees there to discuss how they chose and etc.
I eventually bought a Lasertech franchise... I don't have it any more. Contact me for more info.
Paul Churchley
Fragrance Heaven
The UK's leading stockists of Luxury Scented Candles and Home Fragrances. We stock high quality scented candles, incense, and room sprays.
Web: www.fragranceheaven.co.uk
Email: paul@fragranceheaven.co.uk
|
| |
|
|
Posted on 25th Nov 2008 at 10:33
I'm a franchise holder, and here are my tips:
1. Read the contract and think carefully about the implications. For example, some will have a clause that says if you don't spend minimum amount in a month ordering from them, you have to pay a fee. On the face of it , this seems reasonable and not likely to kick in. Until you find that there are many out of stocks so you can't order what customers want!
2. What happens to your businmess if something happens to the master franchisor? What are there contingency plans?
3. Like any business, over estimate you start up costs.
4. The pros are that you can start up quickly, and for me, I have access to stock that I simply couldn't source myself
5. You benefit from a bigger name. You also suffer from other people's bad reputation.
6. I dislike being restricted to supplied marketing materials, but that's just because it is my background and I would rather create my own.
I'm sure I'll think of more!
Shoes Galore Letchworth
01462 481757
sgletchworth@ntlworld.com
www.shoes-galore.co.uk
|
| |
|
|
Posted on 25th Nov 2008 at 14:22
Hunt down some other b2b franchise owners and see what their experience has really been like
|
| |
|
|
Posted on 25th Nov 2008 at 15:33
Hi, I went to the Natwest Franchise seminar and found it particularly useful and definitely not a plug for their services. In fact their element of the talk was very minimal.
Franchises do have their benefits, in particular their high success rates. However, a failure can be very costly. Really look at the contract terms before taking it on.
I would generally stray people away if they feel they are capable of setting up a simlar style of business off their own back. This can be quite difficult though.
We do have some experience with franchise businesses. Feel free to ask if you have any questions.
Phil Hendy, ACCA
Business Services Manager
Phil@msmalmesbury.com
Moore Stephens - Malmesbury
Accountants servicing North Wiltshire and the Cotswolds
|
| |
|
|
Posted on 25th Nov 2008 at 15:45
Lifted from this thread http://www.4networking.biz/forum/5/21359.htm
Before getting involved in any business opportunity ask yourself a few basic questions.
- How long has this business been operating?
- Has the business model been proven to work?
- What am I actually getting for my money?
- If I spent a similar amount of money setting up on my own, what could I get for that?
|
| |
|
|
Posted on 25th Nov 2008 at 15:47
|
| |
|
|
Posted on 25th Nov 2008 at 15:51
Do take all of the above very seriously..please!!
And...read the contract. I know it is included above, but you should read it twice. And then again, only this time under a microscope.
Franchising, like any other business venture, needs thought and planning. Franchises bring a ready made product, but often they also bring costs that are higher than you might at first realise.
And do NOT believe any of their bumpf about earning potential. Research it yourself, and understand how much you believe it can earn.
There are advantages in franchises, but also a raft of horror stories which is why everyone here is posting with a nervous for you look on your face....But there are also success stories so do give up on the idea, just research, check, research, read the contract, make your own plans, read the contract...etc..you get the idea!!!!
Paul Norman 4N North Tyneside and Oxford
Gibside Associates - a different approach
www.gibside.co.uk
Training for business with, no jargon. Consultancy that makes you think. Helping you be deliberately excellent.
Check here for training courses that might just suit you!
|
| |
|
|
Posted on 25th Nov 2008 at 16:18
Quote:
- What am I actually getting for my money?
- If I spent a similar amount of money setting up on my own, what could I get for that?
From my own experience look into these two especially carefully. I'm now kicking myself for investing what to me was a considerable amount of money in a franchised business (the magazine) that I could be running just, if not more, efficiently if I'd gone it alone. I thought I'd researched it thoroughly but it was only 12 months down the line that I realised my mistake.
Find out exactly what you'll get for your money both at the beginning and on an ongoing basis. Ask to see a copy of the contract before you start - many franchises add clauses that limit what you can do if the contract is terminated for any reason. Check if you are tied in to using specific suppliers, and make sure you know exactly what you'll be paying the franchise company each month.
Ask for a list of franchisees to speak to - but don't just stick with the names they give you (which are likely to be the satisfied ones), also track down other franchisees for a more balanced picture. If possible, find people who used to run the franchise but no longer do, to find out why they quit. (I'm sure if you mention specific companies on here at least one person will know someone who used to do it.)
Make a list of the areas that are a priority for you and check how the company fares - for example, if having support from other franchisees or a comprehensive training programme are among the reasons why you'd rather invest in a franchise than go it alone, check that's what they actually offer.
Any more that comes to mind I'll post later!
Best wishes,
Alison
|
If you spot an error in my post ...well, that's just proof that it's impossible to proofread your own work!
The Proof Fairy Professional proofreading and copy-editing for individuals and SMEs
Editor of Community Times In The Vale magazine, Wantage, Faringdon & Grove
Your virtual reception - Call The Office partner
Tel: 01367 888229 or 07927 330293
|
 |
|
| |
|
|
Posted on 25th Nov 2008 at 16:24
Also don't just speak to the 2 or 3 franchisees tehy give you to check up on. I know of one franchisor that does this, and its like a Disney walk through ride.. looks awesome, but step off the beaten track and speak with other franchisees independently and things are not rosy at all.
|
| |
|
|
Posted on 25th Nov 2008 at 16:33
My advice could go on for pages but I think that it can be summed up in the following few points, most of which have already been mentioned but here goes anyway 
- NEVER believe anything the franchisor tells you!
This may sound rather extreme but I don't mean disbelieve them either. I mean CHECK IT OUT and make up your own mind based of the evidence and not just on their word.
- Get existing franchisee contact details and speak to them. Don't just get a list from the franchisor. They will give you their best performing franchises. You want a cross section of the good and bad. If you can, go and visit them, talk to them, ask them about how they run their business, what problems they have with the master franchisor, if you can get them to show you accounts then look at them too.
Basically, you are trying to establish what the business is going to be like to run once you start both financially and operationally.
- READ THE CONTRACT.
In fact, I would get a franchise specialist lawyer to review it. Yes, it will cost a bit but it will be a damned site cheaper than entering into a 5 year + agreement that you don't want to be in.
- Believe this... as a franchisee, no matter what franchise it is, you will be expected to comply 100% with the contract and the ops procedures and manual. The franchisor will vigorously enforce both to the point where if they have to sue you they will. A franchise works because the procedures are followed to the letter and so expect it to be enforced.
- Ensure you are happy with the supply of product.
Many franchises require the franchisees to buy the items for sale from the franchisor. Often these are at more than market prices. What if the franchisor does not supply you with the product you need or in a timely fashion? You need to be allowed to source goods else where if the franchisor cannot supply.
- Take everything the franchisor says will happen in the future with a pinch of salt.
Things such as support web sites, improved systems, advertising (i.e. spending the national advertising levy - often it simply doesn't happen!), support help from head office etc etc.
Everything in the future can and often does get pulled or delayed.
Judge the franchise on what is demonstrably there NOW and make your own mind up on the future stuff.
- Ensure your protected territory (if you have one) is big enough. Often it looks big enough based on the figures the franchisor quotes but in my experience you may soon out grow it if you are as successful as they suggest you could be.
- Is the franchisor running their own franchise territory?
If not... why not? If they did - why did they stop? If it is such a good product/system then the better franchises will run their own territory as a demo on how to do it. If you get shown accounts for that territory then bear in mind that the costs of such a territory will often be significantly lower than a normal territory as they are run by the franchisor. Never the less, it can be a good guide to possible performance.
Just because they are not running their own territory does rule them out for me but I would need to be happy with the reasons why not.
- Remember... when your franchise term ends you may be restricted on where you can trade afterwards if it is in the same business. The lawyer would help you on that one.
That is my basic advice. Not exactly pages but long enough - sorry!
It may sound to you that I am against franchises or franchisors... nothing could be further from the truth. In my opinion they are a great way to set up in business as you are following a tried and tested path to success. Not every franchise will succeed though as it requires just as much hard work and business accumen as running a non-franchised business, but at least you have the assurance that if you follow the system thoroughly and enthusiastically then you stand a better than average chance of success.
I am simply saying do your own due diligence and don't fall for the often slick and polished sales material of the franchisor. The worst of the franchises I have seen make their money from selling franchises and not from the success of their franchisees. For those bad ones it is almost in their interest for you to fail because then they can then resell your territory! 
Would I have another franchise - yes, definitely... but only if I determined that it had the interests of their franchisees at heart as the path to THEIR success as well as mine.
Paul Churchley
Fragrance Heaven
The UK's leading stockists of Luxury Scented Candles and Home Fragrances. We stock high quality scented candles, incense, and room sprays.
Web: www.fragranceheaven.co.uk
Email: paul@fragranceheaven.co.uk
|
| |
|
|
Posted on 26th Nov 2008 at 08:11
This is great stuff. Thank you to everyone who's taken the time & effort to respond. I'm pleased that I'd thought of many of the points, but equally, there were others that hadn't occured to me.
Great proof that the 4N Forums are a useful tool.
|
| |
|
|
Posted on 27th Nov 2008 at 12:12
If you would like to check out the company whom you bought the franchise, pm me and I will pull up the report for you.
|
| |