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Assess a franchise opportunity

To assess whether a franchise represents a sound business opportunity, you'll need to consider:

  • what the business is and how it operates
  • the location of the franchise
  • the success of the franchise concept - the number of franchises in the UK and how financially successful they are
  • the strength of competition from other businesses
  • how long the franchisor - the company offering the franchise - has been in business and how financially secure it is
  • levels of initial and ongoing costs
  • how much training and support you'll get in setting up and running the business
  • conditions and restrictions in the franchise agreement, including how long it will run and whether you'll have the option to renew

The franchisor will probably give you an information pack but you shouldn't just rely on this. Ask questions and look for evidence of their claims.

Visit other franchisees and talk to them. Ask the franchisor for a full list of past and present franchisees, not just the two most successful ones.

Take advantage of other sources of information and advice. Ask your bank - many have franchising specialists. And make the most of other advisers such as Business Link, your solicitor or your accountant.

How a business plan can help

Just as you would for any other business, you need to draw up a business plan when buying a franchise. This will help you assess the prospects for the business and identify potential weaknesses. A business plan is also essential for raising finance. For more information, see our guide on how to prepare a business plan.