Planning to buy a franchise? Read this friendly and honest beginner entrepreneur advice first.
Planning to buy a franchise? That's great - there are many advantages of franchising, and having your own franchise can enable you to make a fresh start and change your life quite quickly. But it's scary, probably expensive and you could use some unbiased advice, right? Well, you've come to the right place. I've been a successful franchisor for many years, and I've worked with dozens of franchisees too - beginner entrepreneurs just like you. Now, through this website www.entrepreneurbeginner.com, I'm here to help. If you haven't got anything better to do (and you really should have!), you can read more about me at the bottom of the home page. You'll need to scroll down to the very bottom. So you can get back here, the home page will open in a new window. I was fortunate to recently win the HSBC Award for Enterprise for my work in franchising. It was a very proud moment.
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Anyway, to business, and your own franchise. It’s still possible to find a low cost franchise to run, and there are an increasing number of opportunities to buy into a home based business franchise these days, but you need to know what you're doing. If you buy a franchise, it provides the opportunity to be your own boss and benefit from the rewards, but with the added attraction of help, training and support from experienced business people who have developed a proven system that has been tried and tested, and works well, as well as the benefit of a recognizable brand name. There are lots of advantages of franchising, There are always surveys being done on business success, and they highlight many transient things which change over time. However, the one stable thing that crops up in the findings time and again, is that the success of new franchise businesses is much, much higher than that achieved by non-franchised new businesses. More advantages of franchising! This is attributed to the fact that, if you’re a beginner entrepreneur without a successful track record in business, you’re more likely to fail if you haven’t got anyone to help and support you and make you successful. Whereas if you’re a franchisee with your own franchise, you’ll be looked after, supported and nurtured. The franchisor has a vested interest in your success, because they will normally be paid a monthly royalty based on your turnover - and more success means more money for both parties. It's your own franchise, but works like a partnership.
Don't buy a job!
Buying your own franchise shouldn’t be thought of as buying a job. Whilst you’ll have lots of support and guidance, it will still be you who is responsible for making the business a success, especially when it comes to promoting and marketing it. It’s no good, when thinking to buy a franchise, of it being like a 9 to 5 job, with the guarantee of a paycheck at the end of each month. It’s a business. Your business, your own franchise, and the success and profitability will largely be based on the amount of effort that you put in. When you start looking to buy a franchise, take time to fully research the opportunity. Consider whether you could see yourself running the business, and whether you like what the business is/does/sells. In my opinion (and you may feel differently), there’s very little point in coming out of a job you don’t like, with a dream and vision of changing your life, only to dive into a franchise business doing/selling something that you don’t like either. If you Buy a franchise, in my view, it should be something that should enable you to improve and enhance your life - not just financially, but in lifeSTYLE as well!
Banks like franchises
Banks are usually keen to help people who want to buy a franchise. This is because they know that there’s more chance of you becoming successful with an established brand. Therefore, they will quite often lend up to two-thirds of the full amount needed (subject to status of course), which is far more than they would usually be prepared to offer you for an untried business idea - some more useful advantages of franchising.
Finding out about a potential franchisor is VITAL.
Here's how to make sure you know exactly what you're buying...
This is IMPORTANT! The first thing to do when you are thinking you might buy a franchise, is to get their UFOC. This is a business document that's utilized by franchising organizations in the United States. It's short for Uniform Franchise Offering Circular. This UFOC is designed to provide potential franchisees with all relevant information regarding the establishment of a working relationship with the franchisor. UFOC's do cost a bit of cash to get hold of (they take a lot of preparation), but it is money extremely well spent, and at entrepreneurbeginner.com I've made getting these a simple, quick and easy process. There's a link for you a little further down the page. You really do need to recognize that this UFOC is the most important document that you can read prior to making your move to buy a franchise, and it provides an absolute ton of truthful, important information that you will need to make fully-informed decisions when you are planning to buy a franchise. The UFOC contains crucial information you need to gather in the entrepreneurial research stage - before you commit. Information like... How many franchises have been involuntarily liquidated and under what circumstances? What is the contact information for those who have sold their franchise or were forced to leave the franchise? Do the franchise company officers have a criminal record or have they declared bankruptcy? Has the franchise ever changed its identity? What happens to your business when your franchise agreement expires? Will you be able to keep your business or even stay in the industry at the conclusion of the agreement? Is the franchise company permitted to open a corporate store right down the street from your location? All very relevant stuff that you may well not have thought about. But don't worry, all the answers to these questions can be found in a franchise company's UFOC, and I'll show you how to get these on your desktop in just a few moments. I'm not trying to scare you, but unwary investors have rushed into rash decisions by unscrupulous franchise salesmen and some people just like you have paid huge financial and personal penalties for their lack of preparation and knowledge. Only by comparing the litigation, financial and franchisee relationship aspects of two or more franchises will you have any idea if you're making an enormous mistake or the correct investment. When start thinking you'd like to buy a franchise, it's easy to get really excited about it. The RIGHT one can be life-changing and wonderful. But it's important not to become emotionally, financially, or psychologically committed to a franchise until you have the answers contained in the UFOC. The UFOC contains 23 sections including: 1. The Franchisor, its Predecessors and Affiliates 2. Business Experience 3. Litigation 4. Bankruptcy 5. Initial Franchise Fee 6. Other Fees 7. Initial Investment 8. Restrictions on Sources of Products and Services 9. Franchisee's Obligations 10. Financing 11. Franchisor's Obligations 12. Territory 13. Trademarks 14. Patents, Copyrights and Proprietary Information 15. Obligation to Participate in the Actual Operation of the Franchise Business 16. Restrictions on What the Franchisee May Sell 17. Renewal, Termination, Transfer and Dispute Resolution 18. Public Figures 19. Earnings Claims 20. List of Outlets 21. Financial Statements 22. Contracts 23. Receipt So, here's my recommendation for you right now. Buy the UFOC for a few of franchises that you like the sound of. Compare them carefully and then you'll be on exactly the right track. Do this BEFORE you contact the franchisor, so that you'll have all the right information to hand, and will appear knowledgeable. Any money you spend on UFOC's will be recouped time and time again in the future. Up to now, the problem has always been getting hold of these UFOC documents. Well, don't worry, I've completely solved that for you. The link below will take you to a site that absolutely specializes in serving up these hard-to-obtain UFOC's and at a discount of at least 59%! What I love about this unique service, is that you can have these vital documents on your desktop, and be reading them in five minutes or less. I urge you to take this as a crucial first step now... 
Skills that you'll need to become a successful franchisee
When I consider new franchisees for my rockschool network franchise, Clive’s Easylearn Rock and Pop Music Schools, I’m looking for self-disciplined, motivated and enthusiastic people who won’t give up easily and are determined to succeed whatever the world throws at them. I’m also looking for people who have the support of their immediate family, and aren’t under-capitalized or risk-averse when the apply to buy a franchise. Often, franchisees are happy to spend money on a franchise fee and equipment, but struggle to commit to promoting and advertising the business, probably because this seems to carry with it more risk. You should avoid that risk-averse mindset if you want to be a successful entrepreneur and have your own franchise.
Experience not required
A good franchisor should have systems in place to enable motivated people to quickly learn his or her systems. To achieve the necessary skillset quickly, you should check that the franchisor has a robust initial and ongoing training program before you buy a franchise. Indeed, often a franchisor will prefer someone with no initial knowledge of a particular industry, because, that way, they come with less “mental baggage” and preconceptions, and are thus faster and easier to train. So don’t worry so much about the skills you have, worry more about whether you have the right attitude to run your own franchise.
Understanding the franchise agreement
Before you buy a franchise, any good ethical franchisor will suggest that you have the franchise agreement looked over by a competent franchise lawyer. In most countries, there’s a national franchise association, which will normally have a list of accredited lawyers that they can supply to you. It’s not a good idea to use your local family lawyer - although they sometimes won’t say so, very few of these people will have had experience with evaluating a franchise agreement, and may regard some perfectly ethical clauses as unsound, and vice-versa. A proper franchise lawyer might cost a bit more, but will be able to give you good industry advice before you buy a franchise. The reality is that, if the franchisor you have chosen is a member of a national franchise association, then they will quite likely have gone through a fairly arduous vetting procedure, which would include having their franchise agreements scrutinized. Therefore, try to select only franchisors who have good standing in such associations. The job of your lawyer should simply be one of clarifying the franchise agreement for you. Most franchisors won’t change it for an individual franchisee, as it would be considered unethical to do so, the idea being that the whole network should be governed by pretty much the same set of rules, which is, of course, very fair.
For my detailed explanation of a franchise agreement click here.
Cameraderie counts
Another of the advantages of franchising, is that you’ll be able to chat to other like-minded people who are going through the same growth pattern as you. When we run our franchise training residential programs for new franchisees, for example, we like to train several franchisees at the same time. A good feeling of cameraderie develops, as everyone meets other people with similar aspirations, hopes and motivation, and that, in itself, becomes a powerful force for good business - and makes the learning process more enjoyable too. When you’re looking to buy a franchise, it’s often useful and enlightening to have a phone chat with other existing franchisees, to get a perspective of what it’s really like to run the business. Everything isn’t always rosy, and all businesses will have their ups and downs, but by talking to a few different existing franchisees, you’ll be able to piece together a picture of what it’s going to be like “at the sharp end” so to speak.
Useful checklist: Questions to ask a franchisor before you buy
How long have you been franchising?How many franchisees and outlets have you got? Can I have a chat to some of your franchisees? What’s the appeal of your product/service to customers? What makes it different? What are its unique selling points or USP’s (LINK COMING SOON)? What sort of repeat business do you get? What ongoing support do you provide? What initial training is provided? What working capital would I need? How do your franchise territories get agreed? Do I need to buy any products from you? What sales target obligations would I have to reach? How much is your management service fee (royalty), and how is it calculated? Can I see a sample draft franchise agreement? What is the cost of the initial franchise fee? How can you help me to raise finance?
Be a bit concerned if you get responses like these...
Won’t let you talk to existing franchisees.Is vague about support, help and training. Has a short-term franchise agreement - the norm in the industry is five years on more. Requires a big up-front initial license fee. Promises that everything will be easy - it won’t; you will have to work hard to be a success. Promises big profits with little or no investment required from you - you must be prepared to spend money to promote and advertise your business.
Franchise agreements explained in more depth
If you click on this franchise agreement explained link
I’ll take you through a range of typical clauses that you should find in an ethical franchise agreement, and help you to understand them. Whilst this shouldn’t be used as a substitute for calling in a franchise lawyer to look over the agreement before you buy a franchise, it will, I hope, give you some useful pointers, and help you to gain a general understanding of a typical document.
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