Buy a franchise

Assess a franchise opportunity

To assess if a franchise represents a sound business opportunity, you'll need to consider:

  • what the business is and how it operates
  • the location of the franchise
  • the success of the franchise concept - the number of franchises in the UK, the length of time in business and how financially successful they are
  • the amount and strength of competition from other businesses in the same market sector - at both a local and national level
  • any market research that has analysed the public perception of the franchisor's (the business offering the franchise) brand
  • levels of initial and ongoing costs - see the page in this guide on the costs of a franchise
  • how much training and support you'll get in setting up and running the business
  • conditions and restrictions in the franchise agreement, including how long it will run and whether you'll have the option to renew

The franchisor will probably give you an information pack but you shouldn't just rely on this. Ask questions and look for evidence of their claims.

One of the most helpful things you can do before deciding on a franchise is to visit other franchisees and talk to them. Ask the franchisor for a full list of past and present franchisees, not just the two most successful ones. It is important to visit new and established franchises - of differing levels of success - in as many different locations as possible. This should give you a good idea of the challenges you yourself will face should you decide to go ahead with a specific franchise.

Take advantage of other sources of information and advice. The British Franchise Association (BFA) and whichfranchise.com websites have comprehensive lists of solicitors specialising in franchising at national and local levels. Ask your bank - many have franchising specialists. And make the most of other advisers such as Venture Labs, your solicitor or your accountant. Find a solicitor on the Law Society website, and find an accountant on the Association of Chartered Certified Accountants (ACCA) website.

How a business plan can help

Just as you would for any other business, you need to draw up a business plan when buying a franchise. This will help you assess the prospects for the business and identify potential weaknesses. A business plan is also essential for raising finance. For more information, see our guide on how to prepare a business plan. You should be able to get assistance with your plan from the franchisor - and banks with specialist franchise units can check how realistic your projections are.

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