Ten things to discover before buying your franchise

by Mark Scott (National Franchise Manager - NatWest)

1. Take a critical look at your strengths and weaknesses – are you sure you have the capacity, temperament and skills to run your own business? Marketing and selling skills are becoming more important in running a franchise.

2. Make sure you have the full support of your family – the additional responsibilities and demands on your time will inevitably cause some strain.

3. Choose some existing franchisees to talk to – don’t just speak to those recommended by the franchisor – and ask how their business is performing and what support and service is being provided by the franchisor.

4. For new franchisors, check they have run a pilot, how long did it operate, is it still trading and what has it achieved in financial terms? If no pilot was operated, how does the franchisor know the franchise and therefore will you be successful?

5. Examine how well known the franchise and its service/product are. A good reputation is a head start in business.

6. Look at the market as a whole – find out who your competitors are and how strong their position is.

7. Examine costs closely, in particular the franchise fee and monthly management fee, and whether they are reasonable and value for money; will the margins be sufficient to support the business after payment of regular fees to the franchisor? As a guide, the average franchise fee is £20,000, although this is skewed in view of a small percentage of higher figures. Ongoing fees average 11.4%.

8. Is the training provided by the franchisor sufficient to enable you to run the business successfully?

9. Seek professional advice from an accountant about income and profit projections and from an accountant about income projections and from a solicitor about the legal agreement. Both should have a good understanding of franchising and preferably be affiliated to the British Franchise Association.

10. Talk to the NatWest Franchise section about the financial aspects of running a franchise and ask them to put you in touch with your nearest area franchise manager. You should also contact the British Franchise Association.

Mark Scott
National Franchise Manager
NatWest