How to Reduce Risk when Buying a Business

So, investing in a franchise is the best way to start a business and you cannot go wrong?

Absolutely not, despite what the impressive figures produced annually in reports state there is nothing failsafe about investing in a franchise. Yes, it is without doubt a safer option than starting an untried business from scratch. Obviously, a business that has been tried and tested respectively is going to carry less risk.

However, my advice having been in the franchise sector for over 25 years as a franchisee, franchisor and franchise consultant will always be take advice. I am continually surprised to see individuals entering the franchise sector and making what could be one of the largest investments in their life without any advice or guidance.

For instance: You would not buy a house just based on what the seller tells you without assistance from a surveyor and a solicitor, so why would you invest in a franchise based only on the advice of the individual recruiting you into that franchise?

It is so important that the advice you get is from the best, most reputable source possible. Although I would always suggest, unless you have a sound understanding of contract law, that you engage with a franchise solicitor. Otherwise the advice you receive will be limited to the contract (franchise agreement) and maybe the lease, if property based. A solicitor may not be able to give specific advice on the market sector, how the franchise performs in that market sector and the most importantly how the franchise in question matches with your experience, skill set and behavioural style. Similarly, an accountant should be great at deciphering and explaining any financial projections or helping you create your own for the franchise but will be limited to their specific areas of professional expertise and experience.

For myself when I invested in my first franchise over 20 years ago I was very fortunate. I was able to seek the advice of my brother. This was fortunate because not only could he obviously fulfil the role of trusted advisor, but he also had franchising experience having already been successful in a number of franchise territories. But probably most importantly, he knew me, not only as a brother but we had also been co-workers in a previous role, so he understood my behavioural style, what makes me tick. He understood what would get me fired up and enthused and what would get me down. This was very apparent when I would call my brother with the latest franchise that I was interested in, and I looked at quite a few, he would very quickly identify why it may not be ideal for me, which is a very important insight.

There were plenty of franchise models that were very good business opportunities but just not the one for me. When looking at the opportunity you have to consider not just how you feel operating that business in year one, with enthusiasm and everything going well but also how you will feel 3 years in, mid-winter with a poor economy, would you still have the same passion? It was surprising when I did put, what would be the franchise I would end up investing in, forward how instantly my brother, with an objective eye was able to say “yes, that is the one”. I went on to become one of the highest performing franchisees in that network and that was as much to do with it being the best match as it was about the model or my skills.

At the end of the day if we can be involved in something that is a perfect match and therefore we come to it with passion we will do it well and excel even if there are challenges. Equally it is very difficult to make a great success if we are not in the right business model and our true heart and passion are not in it.

So, as I say my brothers mix of professional expertise, trusted advisor and close hand knowledge of my background, skills and attributes proved to be invaluable in assisting me. So much so that ever since I have been amazed when seeing individuals taking the major step of franchise investment without help. This is why over 10 years ago I got involved in helping found Mr Franchise. Mr Franchise provides to our client’s, professional expertise, trusted advice and assistance in selecting a franchise. One based on close hand knowledge of our clients, personal and professional background, skills and behavioural style.

Mr Franchise spends considerable time getting to know its clients, understanding their professional backgrounds, affordability and experience and using latest technology to build a good understanding of behavioural style. From this we can then use our team’s 70+ years of combined franchise experience and industry knowledge to make specific recommendations of what would be the best fit for them.

This may sound like an expensive process and anything done at a professional high level will not be low cost, but our clients security and success is always priority. In fact, the good news is that we don’t charge our client for the services we provide. We charge the franchisor, and a good ethical franchisor has a keen interest in also ensuring the match is correct. In their current recruitment process they will have costs such as advertising, awareness days and exhibitions all that bear a high cost considering how many frogs they may have to kiss with recent reports suggesting 1:100. All of this time and expense is not required where Mr Franchise is bringing to them, a qualified potential franchisee. So, it is a win win for both parties.

There is no cost to the franchisor unless they move forward and award a territory to a Mr Franchise client and apart from a £250 engagement fee there is no costs to our client, and we actually refund the £250 on successful completion. Our only reason in having the engagement fee is to ensure that we are purposely limiting ourselves to working with clients that are serious about investing in their future and ensuring success.

If you want to minimise your risk even further a chat with Mr Franchise will cost you nothing.