the Franchising Handbook The complete Guide to Choosing a Franchise

Publisher’s note Every possible effort has been made to ensure that the information contained in this book is accurate at the time of going to press, and the publishers and author cannot accept responsibility for any errors or omissions, however caused. No responsibility for loss or damage occasioned to any person acting, or refraining from action, as a result of the material in this publication can be accepted by the editor, the publisher or the author. First published in Great Britain and the United States in 2006 by Kogan Page Limited Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licences issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned addresses: Kogan Page Limited 525 South 4th Street, #241 120 Pentonville Road Philadelphia PA 19147 London N1 9JN USA United Kingdom © Iain Murray, 2006 The right of Iain Murray to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. ISBN 0 7494 4541 6 British Library Cataloguing in Publication Data A CIP record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Murray, Iain. The franchising handbook : the complete guide to choosing a franchise / Iain Murray. p. cm. ISBN 0-7494-4541-6 1. Franchises (Retail trade) I. Title. HF5429.23.M87 2006 658.8708--dc22 3 Typeset by Saxon Graphics Ltd, Derby Printed and bound by Cambrian Printers Ltd, Aberystwyth, Wales F 04/05/2006 10:46 Page viii Contents Introduction 1 1 Nothing succeeds like franchising success 6 2 The ins and outs, the pros and cons 20 The different types of franchise 27; The pros and cons 31 3 Any questions? 48 A self-analysis summary 56 4 Searching for the perfect partner 58 Other sources of information 65; Can you afford the franchise of your choice and what do you get for your money? 65; Do I have what it takes? 69 5 Don’t shoot the wrong beast 73 Take a closer look at what catches your eye 75; Checklist 82 6 Getting closer and getting help 85 Better than guesswork 93; The experts 94; The most common snares and pitfalls 99 7 Signing on the dotted line 100 Termination of the contract 107; Things that you – or better still, your lawyer – should look out for in a franchise agreement 110 8 Winning over the bank 112 The borrower, otherwise known as you 115; The amount you want, or need, to borrow 115; The nature of the F 04/05/2006 10:46 Page ix business 116; The nature of the loan 116; Repaying the loan 117; Security 117; The business plan 118; The interview 123; Dance of the seven veils – or what your bank manager will want you modestly to reveal 126 9 Ladies (or should I say women) first 127 Some useful websites for networking women in business 136 10 A little marriage guidance 137 Appendix 150 Index 207 Index of advertisers 211 x Contents F 04/05/2006 10:46 Page x Introduction Unless you are very fortunate you will be among the many millions for whom work is more of a chore than a pleasure. Of course, paid employment has its compensations, not least of which is the money, but in those darker moments that intrude into every working life you are uncomfortably aware that you are, to all intents and purposes, a servant. The organization is your master and as long as you remain beholden to it you will never be free. And nor, if truth be told, will your efforts be fully appreciated or rewarded. You are, after all, working for someone else. No surprise, then, that in those idle intervals set aside for daydreaming, the fondest thoughts are of self-employment. Just think: no more subservience, no more taking orders, no more petty rivalries, no more conforming to other people’s ideas. Oh well, it was only a dream but nice while it lasted. For some, however, the yearning to be free is a wake-up call. They are the determined few who slip the shackles of wage slavery and set up businesses of their own. ‘Lucky them,’ you say, ‘but I haven’t got that kind of entrepreneurial spirit, I wouldn’t know where to begin and anyway I don’t have a business idea.’ But do not despair; you have the answer in your hand. This book sets out with two clear aims in mind – first, to explain how you can be your own boss, and second, to show you how to set about it. If you long to work for yourself but are wary of leaping into the dark and going it alone, franchising is for you. It is in many ways the answer to a dream. Picture someone coming along and presenting you with a business idea, ready-made, tried and tested, and what’s more offering to teach you how to run it and to carry on helping you once you’ve got going. Picture that, and you’ve pictured a franchisor. All you need do is choose the kind of business you would like to own and run and then pick the franchisor to help you make it happen. And if that sounds glib, well, it is. Although picking a business off the shelf F 04/05/2006 10:54 Page 1 sounds easy, it has to be done with discernment and care, because getting it wrong is worse than not having tried at all. Among the chief purposes of franchising is to avoid failure, therefore to fail to pick the right franchise in the first place is particularly inept. But don’t be put off: it won’t happen if you allow yourself to be guided by this book. As you go through its pages you will see how often it sounds a word of caution. This is not to be negative or downbeat about franchising – on the contrary I truly believe it can offer a relatively smooth path into a fulfilling form of self-employment – but rather to ensure that you steer clear of the snares that lie in wait for the unwary. Choosing and buying a franchise should be an exciting and rewarding experience, and what follows, when at last you have a business to call your own, should be better still. Right from the outset you should see your search for a franchise as a campaign, a plan to be laid down, plotted and pursued to its conclusion with determination and vigour. The aim of this book is to give you the map and the weapons to see you through to a triumphant outcome. So no more dreaming, time to get real