Franchise Ireland magazine - past articles

Discover Franchising
May 2007

Is your future in franchising?

For those seeking the satisfaction of being their own boss, franchising can be an attractive option.   Starting your own business through franchising offers the opportunity to run a business backed by the security of a proven business model and the guidance of a franchisor support team.  But what is franchising?

In simple terms, franchising is a relationship between two parties – namely a franchisee and a franchisor.  In practical terms, the franchisor contributes the brand value of an established business, a business that has been proven to work and the ability to transfer the know-how on running that business to the franchisee.  The franchisee’s contribution is the capital investment in setting up their business, the enthusiasm and commitment to success in running the business and willingness to follow the proven way of doing things.  The substance of the relationship is tied up in a legal document that outlines the nature of the relationship, an operational manual detailing the method of running the business, and the training and ongoing support from the franchisor to try to ensure that the know-how is transferred.

Why franchise in Ireland / Northern Ireland?

The growth of franchising in the dynamic Irish and Northern Irish economies can be attributed largely to its core principal of ‘repeating success.’ Franchising has been oversimplified as a business in a box, but what holds true from that description is that franchising allows the franchisee to take everything about a successful business and repeat the success in their area. Statistically the chances of a franchisee being successful are 90 per cent, whereas for standalone small businesses, the figure can be significantly lower.  So franchising works, but it is fundamental that we understand that ‘good franchising’ works for ‘good franchisees’.  The system that you are looking at may be the most proven in the world, but it still has to suit you and you have to suit it.

How do I become a franchisee?

There are a number of step by step systems in place to enable prospective franchisees to narrow down the large number of opportunities out there. Whilst there is no guaranteed fit to personal circumstances it is important that your search for the right franchise has some structure to it so that you are not just using your instincts.

A more detailed and defined approach to research can be found in the bfa book ‘How to evaluate a franchise’ as part of the bfa franchisee guide or by attending a bfa seminar.

Step 1
bfa membership. Of the 759 franchisors operating in the UK 338 are members of the bfa. 61% of new franchisees make bfa membership a part of their criteria for assessing a franchise. Whilst it is not a guarantee of a system, it does ensure that the franchisor has been independently measured against a code of ethical franchising.

Step 2
Your finances. Understand right at the beginning what you can afford to invest and what borrowings you are prepared to take. Also pay attention to the returns that the business will generate for you. Do this before you fall in love with something that you cannot afford or that cannot support you or your family.

Step 3
You. What are you good at doing, what do you want to do and what will your family life and personal circumstances prevent you from doing? If you cannot bear the public then consumer facing businesses may not suit. Equally if you take the kids out every weekend a business that requires weekend work is not the best fit. You don’t have to stay in the industry that you have worked for your whole life but you should be going into something where your experience as skill will benefit you.

Step 4
Research the market. Speak to trade associations for the operational business. Use the internet to research the business that you will be involved in. Those entering franchising are sometimes blinded by owning their own business, they need to understand what that business actually does and the market in which it operates.

Step 5
Visit an exhibition.  The industries operating in the franchise sector are many and varied.  Going along to one of the 5 franchise exhibitions supported by the bfa is an ideal way of seeing the breadth of opportunity available to prospective franchisees.  You will also be able to meet face-to-face and discuss your suitability with a number of franchisors.

Step 6
Research the franchise. Speak to current franchisees, of your choice. This may be managed and not every franchisee wants to speak to you, but don’t just settle for the ones you are given. Look for franchisees with a background like yours or ones at differing stages of development in different areas. Also research the franchisor. What is his/her background? How has the business grown? Have they lost any franchisees? Evaluate the support, the value in the costs and the nature of the agreement. They will all the while be assessing you to decide whether they want you.

Step 7
Be sure. Take your time in this process not somebody else’s. Make sure that the short listed companies have been compared against a standard benchmark or measure and that you have been through in your research. During your due diligence you will need to take professional advice from banks, solicitors and accountants. Make sure that when you do they illustrate understanding in franchising with bfa Affiliate membership. The most important aspect is if you are unsure then you haven’t researched enough and with a decision for 5 or 10 years of a franchise agreement you will have plenty of time to reflect on a mistake. So try not to make one.


Further information
British Franchise Association
Web: www.thebfa.org
Tel: 01491 578 050