Business Opportunities with Danny & Zac - Showing You How To Make Money

If you’re looking at buying a franchise business opportunity there are certain things you want to check out. Because franchise scams are increasingly common which means you could end up buying a very expensive non-starter of a business opportunity!

To start with make sure you look at the hard facts. It’s easy to fall in love with the vision of your own business, but you’ve got to bear in mind the reality. So look past the glossy brochures and tables of figures and make sure there’s a real business opportunity for you. The best way to do this is to speak to other franchisees, visit their premises and get the lowdown from them. Ask them if the business model behind the franchise opportunity is a sound one. And has the franchise lived up to their expectations?

If the opportunity looks good after you’ve hear other people’s experiences and you want to proceed make sure you’re not paying over the odds. A genuine opportunity’s non-tangible assets (we’re talking the license fee, right to use the brand name etc.) shouldn’t cost you more than 15% of the franchise fee. The rest of your fee should go on tangible stuff like training, marketing and equipment.

You should also have the right to sell the franchise on at a later date if you want. The same sort of conditions will probably apply as when you bought the franchise, but nevertheless you should be able to flog it further down the line if you want.

Before you sign anything though get some specialist advice. Most high street banks have their own franchise experts these days and franchise lawyers will spot anything iffy a mile off. It’s also worth seeing if the franchiser has received a British Franchise Association (BFA) accreditation. This means the franchise agreement complies with the European code of ethics for franchising and crucially that the business is financially sound. But remember the company only gets reviewed by the BFA once every three years and the review applies to the whole chain, not the single franchise you could be buying.

Last but by no means least if you’re opening something like a restaurant or a shop ask local businesses and residents if something similar has been tried before and whether it’s the sort of service they’d use. Because at the end of the day it’s their money you want.

Starting up a franchise can represent a fantastic business opportunity, but it can also bring with it a whole host of problems. So if you’re going to try and make money in franchises by all means have a go - all we’d say is it’s really worth doing your homework before hand.

Filed under: Sound Advice