What Franchise - Issue 21.2

Spotting red flags Thinking of buying a franchise but not sure it’s the real deal? The British Franchise Association (BFA) flags the warning signs that should make you pause before you commit 01 Closed door on franchisees The bottom line is that you should be able to speak to any franchisees you like – however, it needs to be a managed process. Franchisees are busy people, and although they should be happy to speak to you, you may need to choose a time suitable for you both. The franchisor can help you manage this process. If the franchisor is reticent to help you talk to franchisees, this is a red flag. 04 Not enough post training support The important thing here is to understand before you buy your franchise just how much support you’ll receive. If you are buying from a well-established franchisor, the support is likely to be extensive and well documented. If you are contemplating buying a territory from a much newer brand, then things are likely to be a bit less formalised, but should still very much be there. Find out what is on offer and ask yourself if you think that is going to be enough to help you run your business. 03 Pressure to sign without legal advice The franchise agreement is always written slightly in the franchisor’s favour, so it is vital you seek expert advice from a specialist franchise solicitor (check out the list on the BFA website) before you sign anything. Any franchisor who belittles the importance of you taking legal advice should be avoided. 02 High churn rate If the franchisor has lost several franchisees in the past 12 months, ask why. Franchising typically has a low failure rate, so what makes this system different? Proceed with caution and dig into the real reasons people left. It may be down to sickness or retirement, but you need to know for sure. 05 Open to changing the agreement Franchise agreements are often non- negotiable. If a franchisor is willing to change, or ‘negotiate’, your franchise agreement (past pilot stage), then it could be a cause for concern. For BFA-accredited franchisors who meet strong ethical standards, visit thebfa.org A ROADMAP FOR... 69 WHAT-FRANCHISE.COM Ins ight