Business Franchise June

83
THE PANEL
Peter Williams you because they view you in a less favourable light than your predecessor.
Q: Is buying an existing franchise better or Together with your personal input of hard work, the adequacy of your
worse than starting my own? training programme is paramount and I recommend you discuss it in
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Tony Fletcher, Cornwall detail with the franchisor and preferably arrange a hand-holding period,
A: It could well be better, Tony. Franchise Resales working alongside the outgoing franchisee who can show you the ropes.
now comprise an important sector of the UK franchise To summarise: in considering a resale, ask a lot of questions of the
marketplace and can offer advantages associated with the acquisition of franchisee who is selling up and make sure the answers are complete.
a going concern. Hopefully the opportunity you are contemplating is in Also, get to know the franchisor – with whom you will have a long-term
a healthy trading position, which bodes well for your own prospective contractual relationship – and take professional advice before making
achievements. However, you should not assume success to be automatic. any payment or signing an agreement. Lastly, in deciding to go ahead,
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To maintain continuity, customer confidence and loyalty, you are going to I suggest you adopt a “new broom” approach, be seen to bring fresh
have to “hit the ground running” in all respects. There will be little scope energy and impetus to the business, and aim to drive it towards enhanced
for error and a worst case scenario would be for your customers to desert turnover and profitability.
Sean Derrig customers? Was it a mailshot or leaflet drop? If you don’t know, you
Q: Is web promotion of a franchise more should: how you have acquired each customer is vital information.
effective than printed promotion? Chances are your franchisor will already have
Jackie Mendoza, Norwich invested in a website designed to attract customers
A: More potential customers which may then be passed to the local franchisee
rely on the internet to find to service. If you want to launch your own site,
information about companies’ products and your franchisor will have stringent quality controls
services, and any business that does not have a in place to protect the brand.
web presence is likely to risk losing out. Don’t forget that the internet is global.
Where the web sits in your own marketing As a franchisee you are trying to reach customers
strategy depends on the type of franchise. Where do locally. Think of the web as an expensive telephone:
your best customers generally come from? Is it the ad in it is another tool to help you communicate with
Yellow Pages? Is it word of mouth or recommendations from satisfied customers as part of your wider marketing plan.
Cathryn Hayes service offered, the market sector in which it operates and how much
Q: How long does it take to start making a proﬁ t investment is required at the outset. The franchisor should provide you
after the franchise fees have been paid back? with financial forecasts based on a pilot operation, performance of
Gino Marquez, Great Yarmouth existing franchisees, allowing you to understand when you can expect
A: The length of time it takes for a franchise to to break even.
become profitable is dependent on the type of product/ You must work out how much it will cost to set up the franchise, how
much you can personally contribute and how much you need to borrow.
You should also carry out a full assessment of your personal financial
commitments to ensure your chosen business is capable of generating
enough income to cover these. Ensuring that you have enough working
capital is important. The business will have various expenses which
will need to be paid. You must also be able to cover your own personal
expenses as the business may not be able to pay your wages for some time.
This financial data will form the basis of your business plan,
covering break-even analysis, profit projections and cash flow forecast,
demonstrating the business’ viability and its ability to meet its
commitments. If you do need to borrow, this document will be used to
assess your request for finance.
JOHN PRATT and society at large.
Send your questions for
Q: Where does a company stand if they feel Advertisements are
the panel to:
that another company offers a similar not allowed to mislead
Q&A, Business Franchise
product, which is described as “unique”? consumers. This means
One Victoria Villas
Anna Pierson, Emsworth that advertisers must Richmond
A: Many businesses make statements about themselves hold evidence to prove
Surrey TW9 2GW
or email:
which strictly speaking are not true, but where it is the claims they make
editor@circlepublishing.net
pretty obvious to anybody that it is mere “puff”. These sort of claims about their products
are generally taken with a pinch of salt. In this case the business or services before an
claiming that their product is unique may be stepping over the line if advertisement appears.
their product does not have any unique features over the other product. If you are concerned
UK Advertising is mainly controlled through codes of practice. about an advertisement
The Advertising Standards Authority regulates the content of that is misleading you
advertisements in the UK and acts to ensure compliance with its can also contact your
Code which requires all advertisements to be legal, decent, honest, local authority trading
truthful and to be prepared with a sense of responsibility to consumers standards department.
www.businessfranchise.com June 2008
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