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• At first glance, buying a franchise appears to be
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a fail-safe method of expanding a business. The most obvious transport examples are in the parcels and next-day deliveries sector. Franchisees have the immediate advantage of being able to tap into an organisation with a proven track record, they can use their brandname and are guaranteed a support package which usually includes training, marketing and promotional back-up.
PROBLEMS
One of the main problems is that the reputation of the franchise can be easily damaged by the franchisor or another franchisee.
Contracts can also prove to be a headache if they are drawn up badly as this can lead to expensive legal battles for franchisees.
With the rapid growth of franchising in the 1980s, a network of information and support services has developed to help operators decide if buying a franchise would suit their business needs.
All four of the big banks offer specialist franchise services and produce comprehensive enquiry packs.
Lloyds Bank's pack gives a brief outline of franchising, key issues to consider and sources of further advice. Lloyds recommends that potential franchisees talk to branch or business centre managers who can draw on a computerised database of franchisors in a particular area.
The Midland Bank produces a series of booklets on franchising, which includes general advice on setting up in business. It also provides a list of consultants and solicitors who specialise in franchises. The Midland strongly recommends that potential franchisees have their contract checked by a franchise solicitor before they sign it. It offers this service for £275 (ex-VAT) through a Birmingham-based solicitor.
Barclay's franchise pack includes a similarly comprehensive checklist of questions a prospective franchisee should ask both the franchisor and existing franchisees, as well as contract details to check. The bank has recently published a paperback as part of its Small Business series, called Franchising for the small business. The book is available free and is co-written by Brian Smith, a franchise consultant and former chairman of the British Franchise Association.
WATCHDOG
Since 1977 the British Franchise Association has been the industry's watchdog and publicist. Franchisors who wish to join the association must have run a successful franchise for at least two years with no fewer than four franchisees.
The BFA organises exhibitions, seminars and regular meetings, For £17.50, you can buy a franchise pack which includes a cassette tape, a selection of leaflets, and a 60-page booklet on assessing franchises.
In addition, BFA members provide information on their own franchises together with a list of useful publications, and a copy of the BFA's quarterly magazine, Franchise Link.
Both the banks and the BFA strongly advocate drawing on the experience of franchise professionals. Franchise consultants will run feasibility studies, and help with pensions and insurance.
The Franchise Consultants Association can put operators in touch with members in their area. Information on reputable franchise lawyers and accountants is also readily available.
The bi-monthly magazine Franchise World and its sister publication, the Directory of Franchising are both valuable sources of information. The directory is available from public libraries. 0 by Gill Harvey