Franchisees

Buying a franchise helps to reduce the risks of business failure because you'll have:

• A proven business system - used by the company you're acquiring the franchise from - the franchisor
• An established name and business - you'll be using the franchisors good name, know-how and products or services to increase your business success
• Support - you should receive initial and ongoing support from the franchisor

Your franchise relationship manager will guide you in all financial matters, and more besides.

Here are a few pointers to consider when becoming a franchisee:

The start-up costs of a franchise you run from home will be very different from a franchise that needs premises and stock.

To assess your price range, a very rough rule of thumb is to add up your savings and multiply by three. So if you have savings of £20,000, you could expect to be able to finance a franchise with start-up costs of around £60,000.

Many franchisees make the mistake of over-borrowing. This could cause difficulties, particularly in periods of depressed sales or high interest rates.

Running your own business – franchise or otherwise – can be extremely rewarding. It can also be very stressful. You’re responsible for your own income, and you may have to invest your life savings or take out a loan against the security of your home. These are serious factors to consider. Just make sure you’re going into franchising with your eyes properly open.

This is largely a matter of common sense. Choose a business you'll be happy to work in day-after-day, preferably one where you have some aptitude or affinity and perhaps even some experience.

Here are some points to consider in assessing the best type of business for you:

• Is the franchise serving an established market, or has that market yet to be developed?
• Is the market expanding or declining?
• Is it seasonal?
• Does it depend on trading from highly-specialised sites?
• How strong is the competition?
• Is the franchise competitive in its market?
• What share of the market does it hold

Once you know your budget and the type of business you're interested in, you have to choose your franchisor.

If there are only one or two franchisors in your category, it would be wise to select a second category to avoid having too small a choice. This will also give you a wider selection of territories as many franchise agreements stipulate a geographic territory which the franchisee can operate in.

Deciding which franchisor is right for you is the last stage of your assessment process and the most important. You may be right for franchising and the market you have chosen may be full of promise, but this will not make up for an ineffective franchisor.

Think about the following questions:

• Has the franchise been sufficiently tested and are its franchisees successful?
• Do the initial and ongoing fees represent good value for money?
• Do the on-going fees still leave the product or service competitive and provide enough profit to make the business worthwhile?
• Does the franchisor have sufficient financial and management resources to provide the support promised?
• Is the franchisor fair and ethical in all business dealings?
• Is the franchisor a member of the British Franchise Association and abide by their code of practice?
• In the event of the franchisor's failure are there alternative suppliers?

There may be restrictions imposed on you if you decide to leave the franchise. You are unlikely to be allowed to carry on trading under your own name in the same type of business from the same premises.

Whatever industry sector you have ambitions in, you won’t go it alone. Your dedicated franchise relationship manager is there to help you every step of the way.

Restaurants and fast food outlets; hairdressers and retailers; fitness and health facilities; estate and letting agencies: whatever sector you’re interested in, our highly-trained franchise relationship managers are all experts in their fields, and work solely with customers in the franchise industry.

We have 1,600 branches across the UK, so not only are they sector experts, they’re also embedded in the local community. So as well as having a keen appreciation of national economic trends and conditions, they’re also well aware of the opportunities in your industry and your area: they’ll be able to advise you on the viability of your business proposition. Your franchise relationship manager will help you with the day-to-day running of your account, as well as everything from obtaining new equipment or vehicles, to shop fitting costs and working capital. He or she will also support you in terms of which accountants and solicitors to use, for example.

And because they’re locally based, our franchise relationship managers will be on-hand to give you the personal level of service you expect – when you expect it, and always directly by phone or email.

It’s no wonder that we help more people to establish and run small businesses each year than any other UK banking group.