Like every industry, the franchising industry has consultants. The role of a consultant is to offer help, advice and connections to help people get what they want. Essentially, they use their years of experience and the details provided by the client to find exactly what the client is looking. This could be a first time business owner buying into a business package, or a business owner restructuring.
A franchise consultant works on both sides of the fence. They can offer their consulting services to both potential franchisor (the owner of the rights to the company) and the potential franchisee (the individual who owns/wants to own one of the franchises).
Franchisor consulting
A consultant will help a company owner to determine whether or not franchising their business is the right move. For some businesses, it is and for others, it isn’t. There are lots of factors to consider before deciding which route is the right one to take.
One of the things worth considering and discussing with the consultant is the long term goals of the company. In order for the consultant to understand what the right option really is, they need to understand the business. What is the current business model? Is the current business model easy to replicate? Are there unique selling points that will persuade potential franchisees to sign up?
There are 101 questions that need answering. The consultant will research the market place. For instance, if a company offers a localised window cleaning service, then they will see what the potential is for expansion in other areas. They will also check out any existing franchise opportunities that might to be considered to be competitive. Obviously if there is a similar franchise option available, then the uptake might not be as high as the business owner would like.
Another thing to consider is funding. Many businesses franchise simply because they don’t have the cash flow to expand consistently. It is worth speaking to an accountant and business advisor on this subject.
They will be able to look at the company accounts objectively and determine what the future holds in terms of finance. Generally, if finances are not going to allow for regular investments, a company is not going to be able to grow consistently. From a consultant’s point of view, this means that franchising the business may be the only feasible option. But franchising is a complex project and most business owners don't have the skills and with the complexity of developing a business in preparation sometimes business owners take their eye off the ball.
Franchisee consulting
The other job of a franchisee consultant is to advise potential business owners of the opportunities available to them. Although a lot of people like to develop their own business models and ideas, sometimes this is not the best move. There are a lot of successful franchisees in the world. They have been able to take the help, support and proven formula of a business and make it work for them.
During a franchisee consultation the consultant will discuss the various niches where franchises are currently available. The main thing they will highlight is the royalty and purchase costs of a franchise. A lot of people see the initial cost of a franchise as a payment for services. In fact, the majority of franchise purchases include things like on-going training, marketing materials and even equipment. Essentially, if the individual decided to start up on their own then they would still have to payout for these items.
The royalty fees may vary from 1-20%. Obviously the royalty fees charged will be a reflection of what the franchisor expects the franchisee to achieve in terms of turnover and profit. A business that nets high profits is likely to have a much higher royalty than one that has low net profits.
Conclusion If you are considering franchising your business, or purchasing a franchise, then you should speak to a consultant first. They have years of experience in franchising as an industry. They have seen which type of people suit which type of franchises and they also know which businesses should be franchised. Many of the consultants in the UK offer their services for free, so you won’t even have to outlay any cash
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