House price rise gives options for franchise buyers
Nick Strong - Franchise recruitment advisor
According to the Nationwide, the average price of a home is now £160,224, up from £158,871 in July. While prices are still lower than last year, the annual rate of decline in property values slowed sharply to 2.7%, compared with July’s 6.2% fall.
Clearly house values can go up as well as down. We have seen this during the current economic climate and the current rises may be due to reduced stock available. However, the rise in house values may be a boost for confidence to lenders and borrowers considering buying a franchise.
In addition the UK government has actioned its plan to guarantee £20 billion of small and medium loan guarantees. Banks and thier franchise departments have respond positively to lending to franchise business.
The banks are keen to work with proven franchisors and well prepared franchise buyers. As far as the banks are concerned a proven franchise business is one that fits at least the following criteria:
- Ideally the franchisor will be a member of the British Franchise Association
The bank will have a good and open relationship in existence with the franchisor
The bank will be happy with the franchisor’s financial performance
The bank will be happy with the franchise buyer’s financial history
A preferred franchise buyer for the banks is a person, partnership or business that has a well prepared business plan. The plan will demonstrate the franchise buyers understanding of:
- The market they are wanting to enter
Local competition
Substantiated argument for potential projected revenue claims
Why the franchise is right for them and the territory being offered
How the franchise buyer plans to secure the loan funding
How much liquid capital it will require to run the business
How the new franchisee will manage cash flow and personal living expenses during the first year of trading
The banks are very keen on lending to new and existing franchise business because the NatWest/BFA franchise survey confirms that year after year that over 90% of UK franchisee run businesses are profitable. That means that a new franchise business have over 90% success expectation which is by far better than the statistics of go it alone entrepreneurs.
Franchising is a proven way to increase personal succcess in self employment. The banks like it and in many cases franchise funding from the small business loan guarantee scheme may be used during 2009 to fund franchise business development.
For research of franchises for sale and expert comment visit www.SelectYourFranchise.com.
Tips For Finding the Right Internet Franchise Business For You
Naz Daud - Owner, CityLocal
Have you considered the idea of having your own internet franchise business, able to choose the hours you work, with your own business model, and be your own boss? Have you also decided not to take that step, because of worries and anxieties about the risks involved, the uncertainty, or even because of concerns which you may have regarding how to identify legitimate franchise opportunities from the scams?
If so, then you are certainly not alone, and there is an increasing number of people who are now turning to internet technology to help create a better work life balance and distancing themselves from the increasing uncertainty of the workplace and job security. It seems that people now want to take charge of their own lives, their own careers and their own independent financial security.
Whilst it would certainly be misleading to suggest that there were no scams or untrustworthy internet franchise business models and ideas available online, there are enough genuine, and proven ways of earning either a part time or full time income online to make it well worth a proper investigation if the idea appeals to you. If this sounds like you, then here are some basic pointers to ensure that whatever steps you take, and whatever decisions you make, you are more likely to emerge from the experience in a positive frame of mind.
Legitimacy
We’ve all seen those online business offers and adverts suggesting that the author made tens of thousands of dollars in the first week, is now a millionaire a few months on and generously giving all his money making secrets away for about fifty dollars a time.
The point to bear in mind is that if it sounds too good to be true, it almost certainly always is. Yes, the internet has spawned many millionaires, and yes, some people have made a fortune in a very short space of time. But when you consider the millions of people using the internet, this isn’t surprising. In all honesty, you have as much chance of making a few million dollars overnight through an online franchise business as you do winning a state lottery.
If you start to read an internet franchise business proposal or scheme, and you realise that most of the description centres on the single individual case of the person who started it, offering no guarantees or assurances of your success, then it may well be best to move on. The best, and most promising online business schemes and ideas tend to focus more on what is involved, what you will need to do, how the financial model works, and present realistic, rather than fantastic targets and expectations.
Support
If you find a few franchise business ideas which sound interesting, drop a direct line to the owner. Unless you’re thinking of starting up your own completely independent, unique business yourself, without taking on board a basic model idea of franchise project already in place, then the chances are high that you’ll need to communicate with this person quite frequently in the first few days, weeks or perhaps even months. So email the person, and see what happens.
Do they reply? How quick is the response? Is it written personally, or just an automatic reply? Is the message written in a way which sounds pleasant, helpful, and supportive and actually seeks to answer your question? This can reveal a lot about the validity of the business model and the likelihood of your success with it.
Suitability
Another thing that you need to bear in mind is the nature of the franchise business itself, and any opportunity to adapt or extend it in ways which suit you and your personality. It’s too easy to pick a web based or home based business opportunity based purely on its reliability, legitimacy or likely financial expectations. Since you could well be looking at the idea as being a long term career opportunity, you need to be honest with yourself about how you see this idea developing.
Are you an extrovert? You might prefer to look at online franchise businesses which involve a great amount of service related work, communicating directly with consumers in various ways. Perhaps you are more of an introvert, and would prefer a business which sees you working in a much more private, solo fashion, focussing more on the product or service than on the communication with customers. Think about how you see yourself and the franchise business in twelve months time. Is it possible to see yourself happy, progressing well and with a business which is both succeeding at the same time as providing you with fresh challenges and opportunities?
Research
One advantage of considering an online or internet franchise opportunity is that you will be in good company. There are thousands of people who have already taken the plunge, learnt from mistakes, discovered successes, and who are more than willing to share those with you. Sign up to forums and discussion boards where people can share these ideas and experiences, and don’t be afraid to ask people for advice, and listen to their responses.
Naz Daud is the founder of the CityLocal franchise, a franchise opportunity for people who would like to work from home and be their own boss… Read more about CityLocal
HSBC Commercial Banking launches its inaugural Going International report
Cathryn Hayes - HSBC Head of Franchising
Following on from the success of the “Future of Business” report issued in May 09, HSBC has commissioned a “Going International” business report. The report looks at 500 UK SMEs who are trading or planning to trade internationally, drawing on their experiences and the challenges faced. The findings reveal that the key to growth in the current climate is trading internationally and that the perceptions around barriers to trade are often not the case in reality.
Key findings of the report include:
- International trade is the passport to growth – 88% of businesses who do trade internationally see it as being pivotal to their success
- Perceived barriers to going international are not a significant issue in reality
- Four in five SME’s currently trading internationally consider it to be a profitable venture
- 78% of International businesses have grown by at least 10% and one in five SME’s have grown by 50% as a direct consequence of “going international”
- 66% of companies trading internationally believe UK businesses are well placed to take advantage of the current climate
This is particularly relevant to the franchise sector. According to the bfa, the number of British-run franchise systems with an international presence is 33% (278 systems) and a further 20% of franchisors aim to establish units outside of the UK.
The UK has long been at the heart of international trade and despite a tumultuous market environment both domestically and worldwide over the past two years, HSBC believe that there are still opportunities for many businesses, including franchises, to develop international growth strategies.
Commenting, Noel Quinn, HSBC head of commercial banking, UK, said: “Conventional wisdom assumes that trading internationally is expensive, complicated and ‘not for businesses like us’. Our study has shown that, in most cases, businesses that adopt an international strategy are growing. In addition, it is costing less than anticipated to set up and the impact on the bottom line is better than expected.”
If you would like a copy of the report, please email HSBC Franchise Unit at: franchiseunit@hsbc.com
