Do you need to take independent legal advice on your franchise investment?

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Perhaps the most commonly asked question that I have from prospective franchisees, with regards to the legal agreement, is whether they have to obtain independent legal advice. My answer is always “absolutely” – and then I usually enter into a long discussion about why you should use a solicitor that understands franchising, rather than a general commercial or family solicitor. In my opinion, there are two main reasons to use an expert:

  1. Cost: surprisingly, using an expert often ends up far cheaper than using a general practitioner. The reason for this is that most solicitors want to show value for their fees, and hence create a long list of potential issues and areas for negotiation. Realistically, as a franchisee you will not be able to get a franchisor to amend their terms, and it is also intended to be in the franchisors favour in many areas! Therefore this negotiation becomes a waste of your money, and might lead you to not take on an agreement that is actually pretty normal for a franchise agreement. Franchise specialist advisors understand this, and hence look to protect you in respect of clauses that might be out of the ordinary when compared to other franchise agreements.
  2. Industry knowledge: an advisor who is established in franchising will be aware of who’s who in the industry, the concepts that are successful, and ultimately will be able to advise you practically in respect of both the agreement and what to expect when you take on the franchise. This experience is invaluable, and simply not available from the vast majority of high street firms.

Now that we know why an expert should be used, it is worthwhile stepping back and understanding the general need for advice. Simply put, the agreement is a major commitment, which ties you in for a number of years and will require major financial input. Failing to perform simple checks on what you are purchasing can lead you to make a very expensive mistake – certainly, I’d hope most wouldn’t purchase a house without a survey…

The above is an extract from The Franchising Handbook, which is due for release imminently. Follow this link to pre-order and be one of the first to read it!

You can read the original article written  by Carl Reader on his website 


Rich Network Intelligence | Do you measure and manage it?

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d&t’s franchise dashboard combines all your and your franchisees data. Then creates one complete network wide view. Real-time management and financial information in one place.

Just like Google Analytics for a website, our free of charge tool provides franchisors with a detailed insight into the performance of each franchisee and the network as a whole. Not an approximate guess. Real data on real graphs on a dashboard that is simple to digest and drill into.

The universally quoted ratio of total network performance is 20:60:20; where the top 20% of franchisees are flying, 60% are doing ‘ok’ and the bottom 20% are struggling. Not all franchisors agree their network falls into this split of performance, but often it is more gut feel or a judgement made on MSF.

A franchise by its nature, is a business model that has been developed into a system to follow, for delivering a product and/or service for a monetary return. It should therefore be straightforward to measure and manage a network of franchisees, all supposedly following the same business model!

As you know it can be incredibly difficult and time consuming to look at each of your franchisees in isolation. d&t’s franchise dashboard means you can integrate all your network wide data across every franchisee:

  • A segment of one
  • A segment of many
  • A segment of any

Analysis of your network will reveal trends. Really knowing your business comes from a single network view, shared how and where you want.

If your business is already using cloud software such as an accountancy package, a project management system or CRM, you’re likely to be sitting on a goldmine of data.

Utilising a dashboard enables franchisors to target franchisee support, drive change, whilst monitoring progress to ensure the improvements are maintained.

The result? Happier, better performing franchisees who are making more money. It is a new culture of targeted support, increasing performance and simple efficiency.

So how do you guarantee ROI in this area?

  • Access: use an online accountancy package and standardise it across the network (QBO, Xero)
  • Design: really think about what management information (MI) you and your team(s) need.
  • Deliver: you do not have to accept excel reporting. Graphical representation is now standard, it gives you the bigger picture, helps represent trends and exceptions.
  • Measure: you have the ability to continually measure the performance of the whole network. For example, spotting early warning signs or checking your MSF. ROI is guaranteed as everything is being measured

Who are d&t?

For 10+ year’s we’ve been the go-to accountancy partner within the franchise industry. We represent >100 networks. 8am-8pm support. National Coverage. Adding Value, Not Numbers | 01793 741 600 |

Potential franchisee? How to approach a franchisor

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Once you have narrowed down your shortlist, you will need to start approaching franchisors. It is important to remember that the franchisor has invested a lot of time, effort and money in building their brand, so they want to ensure that you will be the right partner for them to achieve mutual success. They will also not want to have a franchisee failure on their hands, as this will reflect badly on them insofar as a banks view on their network. It will also have a significant drain on head offices resources, as they will need to manage the situation pre-failure. Finally, the other franchisees will be affected by a fellow franchisee failing, and this will impact on the overall network morale.

You should prepare for this approach in the same way that you would prepare for a job interview: before you even pick up the phone, or email them, research the company and learn as much as you can about them. This advice might seem very basic; but it’s surprising how many people enter the first stage of the communication process blindly. This will put you in good stead for the development of the conversations, as most franchisors will look to filter their applicants during the initial contacts so that they only devote significant time to the ones that they consider are serious about investing in their network.

This is perhaps even more so nowadays, given that the internet has allowed prospective franchisees to contact several franchisors at once, simply by selecting the ones that they wish to obtain more information from. Previously, prospective franchisees had to phone each and every franchisor, and spend far more time around the initial process during ‘work’ hours. With the internet, there are more hours and less time per initial contact – perhaps a recipe for drunken 2am enquiries to each and every franchisor in a particular directory!

Given the first paragraph, it goes without saying that all communications should be professional. Make sure that there are no spelling mistakes in your emails, and that you are communicating clearly. When meeting a franchisor, make sure that you are projecting the image that you wish to project, as if you were applying for a very senior job at their organisation. There will be an element of the recruitment process which becomes ‘salesy’, but you do need to bear in mind that it is a two way process at all times, and the franchisor will be cautious of any red flags that you may inadvertently raise during their discussions and communications with you.

The above is an extract from The Franchising Handbook, which is due for release later this year. Follow this link to pre-order and be one of the first to read it! Here

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