from David Banfield, president, Interface Financial Group.
If you are thinking about buying a specific franchise, or rather seeking a franchise award – is this a good time to proceed?
There are probably many different aspects that we could examine to make a determination but the fact that we are talking about a franchise, the results will probably err on the side of ‘buy now’.
What makes a franchise different from buying a new car – we could easily put such a purchase off perhaps until the new models arrive, and we get a slightly different choice. In buying a car, whether we buy this year or wait a year, the reality is that it is still a car and the very basic features will not change to any great degree.
The same argument might easily be applied to most franchise models. They are unlikely to change much from year to year. In fact the lack of significant change is often one of the ‘selling’ features of a franchise. What we have to remember about a franchise, however, is the fact that the majority of franchise models are geared to a specific territory and once that is awarded, then it is gone! If you are looking at a franchise in a specific location, then there are no guarantees it will be available at a future time. The car you are buying will certainly be available in one shape or color in the future.
Buying a car now or later may also be influenced by your finances and the economic circumstances prevailing at the time. If you can’t afford the car, then putting off the purchase is probably the only avenue open to you. Taking a major step, such as entering the world of self-employment and entrepreneurship, is much more likely to have considerable time and planning already invested in it.
Because a franchise is usually a ‘tried and tested’ method of business ownership, it is less likely to be prone to ups and downs in the economy. Franchises are often organized so that they can weather the economic storms that come along from time to time. This situation is usually predicated on the fact that franchises are not spurof- the-moment ventures, but long-term enterprises that represent a career path for many people. Therefore, it is reasonable to assume that people looking at a franchise award will have already invested time and effort into investigation.
Pursuing a franchise award is not like buying a product ‘off of the shelf’ or from the showroom. There needs to be much more research into the specific venture. That research and the walk through the discovery process can often be a process that takes weeks or even months. It is also a serious process that needs to be pursued in a business-like manner. This all translates into ‘once you get started keep going to the finish line’. The finish may not always be what you are expecting but at least you have to travel to that point.
From a timing point of view, location or territory can be a major factor in the decision making process. It should, however, be mentioned that not every franchise has a territorial structure. There exists in the franchise marketplace a number of ventures that are classified as non-territorial. The time pressure, therefore, may not be so great with a non territorial brand. However one should
also investigate them equally as closely as, while they may not be geared to a geographical territory, there may well be other aspects that are exclusive to a franchisee and as such a time element may be involved in the decision making process.
In looking at a time line for seeking a franchise award it is always advisable to look at the entire process, from basic investigation right through to the time when the business is actually open for business and the cash flow starts. It is important to look at this aspect, as in many franchise models the entire investigation to opening the process may well run into many months. This
will be especially true with ‘bricks and mortar’ franchises where there may be a construction process to follow or, at best, a refitting of some existing premises.
There may also be the need to hire employees and to build a suitable training program for them. There may be a need to purchase speck equipment that needs to be custom manufactured. There are many different aspects that need to be factored into the time line.
Naturally once a franchise has been awarded the franchisor will also be greatly involved in all of these ‘getting started’ areas, however they usually have to follow a pre-set time line. Therefore, if you are a person that likes to investigate, make a decision and get started in the franchise world, sooner is surely better than later.
David Banfield is President of The Interface Financial Group, a position that he has held for over 20 years. He has been instrumental in starting Interface as a franchise opportunity and building it to its current international status. Prior to his involvement with Interface, he worked extensively in the banking, credit and factoring financial service areas.
For more information visit: www.interfacefinancial.com