Global Franchises

Choosing a franchise

There is more to making a decision to buy a franchise than to evaluate the proposition.

Many prospective franchisees have never been in business on their own account so the first on the list for evaluation should be him or her self.

Self examination must be objective and realistic and should enable the prospective franchisee to reach a conclusion about what sort of franchise would be best after taking into account such factors as, for example:

• What do I do best – manual work, selling, organising, mixing with people?
• Does my family support me?
• Am I capable of putting all my financial eggs in one basket?
• Do I really appreciate the stress levels which go with self employment?

It is important to weigh up the pro’s and cons of franchising compared with other ways of going it alone. The pro’s include:

• training;
• benefiting from being able to use a tried and tested business system;
• continuous back-up and support;
• being part of a larger organisation or benefiting from the advantages which size produces, eg. bulk purchasing and pooled resources.

It is necessary to investigate the Franchisor and how long it has been in business; the shorter the period the more searching the enquiries the longer the period the more likely that there is a track record on which to check up.

Choices may need to be made between the franchisees on offer to be certain that the right decision is made.

There are danger signals:

• Do not become involved in Pyramid Selling schemes ie. where selling participation rights is more profitable than selling the end products or services if indeed there are any;
• Heavy initial fees and low or non-existent continuing fees;
• a contract which does not match the promises;
• a hard sell;
• get rich quick offers;
• unhappy existing franchisees in the system.

Article provided by Dr Martin Mendelsohn
(Martin Mendelsohn is a leading franchise attorney and Partner at the Law Firm Eversheds.  Eversheds is a member of the International Franchise Association Supplier Forum.)