Owning a franchise is a very popular way of earning a living and a common entry point for people who want to run their own business but want less risk.

By their nature, the tried and tested franchise formula brings peace of mind, clarity to the business plan and many appear to offer a much cheaper and safer way in to business than setting up from scratch.

But when buying anything “off-the-shelf” you need to assess the products available and make a judgment about whether the franchise is likely to work for you.

When you go to buy a car you will consider the different makes and models available and what they have to offer. Price may play a big part in your decision but you know that just because one is cheaper than another doesn’t make it a better deal. You will consider the quality of the brand, the fuel consumption, the space, the cost of spare parts and numerous other things before making a judgment on which make and model you want.

Buying a franchise requires a similar process – though hopefully even more thought – and one of the golden rules is that cheaper is not always better.

Of course, well known franchises are likely to carry a higher entry fee and newer franchises in the market - which may appear to be “copies” of successful, established ones – are often significantly cheaper, which has its attractions.

But cheaper options also come with potential pitfalls;

• The brand may be less well-known;
• It may not have been as well tried and tested;
• Support may have been reduced to make it cheaper.

Would-be franchisees often labour under the misapprehension that once they have bought a franchise, customers will flock to them, perhaps sent by the franchisor.

Of course, you are unlikely to meet any existing franchisee that says this is the case (though some franchisors may encourage you to think so). All franchises require hard work but brands that are not well known will inevitably require even more investment in time and money to market them.

The cheaper, less well-known franchises may be a copy of a very successful franchise brand. Superficially, they may seem to do everything that their more illustrious forebears did but would-be buyers should look very carefully.

One of the difficulties that may be encountered is that newer franchises haven’t got an extensive track record. Potential buyers should treat them with caution and not be fooled into thinking that just because they look similar to successful franchise brands they will perform in the same way.

It is also not unusual for a franchisor to have one or two very successful franchisees in a network with others achieving significantly less. The good ones, of course, will boost the network’s average performance. Consequently, it is important not just to look at the network as a whole but also at the most successful and least successful within it, if at all possible. And the more franchises you look at, the easier you’ll find it to get a good feel for why some work while others do not.

Of course, when it comes to cost, would-be buyers should always ask themselves why the franchisor is offering this particular franchise relatively cheaply.

The business model may appear sound, it may be tried and tested, it may be well located but it could be that in order to lower the price the franchisor has reduced the level of support the franchisee will receive. Once again, the devil will be in the detail.

Despite the above, prospective franchisees should not let these words of caution put them off. The whole concept of franchising is a remarkably attractive way of going into business. But like any business there are pitfalls to be avoided and the only way to do that is to tread carefully.

About the Author

Solicitor Steve Thompson is the franchising consultant at Cardiff-based Darwin Gray Solicitors who are Professional Affiliated members of the British Franchising Association.

To contact Stephen email sthompson@darwingray.com