Money Making

ADVICE
Send your questions to Ask The Experts, Making Money, Aceville Publications,
3rd Floor, Queensberry House, 106 Queens Road, Brighton, East Sussex BN1 3XF.
ASK THE EXPERTS
Your franchise questions answered by
our panel of industry specialists
Q
What should I expect from a
franchisor ‘discovery day’?
JOHN PRATT WRITES:
The purpose of a discovery day is
twofold. First, to give you as much
information as possible concerning
the franchise opportunity. Bear in
mind that the franchisor is trying to
sell the franchise, so you do need to
treat what you are being told with
suspicion and check it out.
The best way of doing that is
to obtain a list of the franchisor’s
franchisees - not just the ones the
franchisor wants you to talk to - and
ask them how good is the support
from the franchisor, how much
money do they make, will they renew,
etc.
The second purpose of a discovery
day is for the franchisor to find
out more about you and establish
whether you would be a suitable
franchisee. That doesn’t mean you
should be on your best behaviour, but
it does mean that if you’re offered a
glass of wine or a beer at lunchtime
that you don’t have too many and
start behaving badly.
You should remember the golden
rule in picking a franchise, which
is never to hold back in asking
whatever questions are troubling
you.
Q
UWhat form does the typical
fanchisee recruitment
process take?
BRIAN DUCKETT WRITES:
There probably isn’t such a thing
as typical, as they vary so much,
particularly these days when
franchisors are moving towards a
more automated process for the early
stages. But let’s look at all the things
that should be part of it.
Modern franchisee recruitment
means the applicant will often not
even contact the franchisor before
they know an awful lot more about
the business, its management and its
franchisees than they did in the past.
This is because of all the information
that’s available on official and
unofficial websites and social media.
The good news is that by the time
an applicant makes themselves
known, they will have decided they
are indeed a serious prospect and
not just a tyre kicker who has clicked
umpteen boxes on a franchise
recruitment web portal.
From here on in the franchisor
simply needs to satisfy itself the
applicant has the necessary skills,
attitude and financial resources to be
successful in their own right and as
part of a network.
This will be established through
a comprehensive application
form, leading to various meetings,
including with existing franchisees.
There will then be the completion of
a well prepared business or funding
plan, followed by the explanation of
the terms of the franchise agreement
by an experienced franchise lawyer.
Outsourcing the process to an
experienced franchise recruitment
consultant will often ensure
everything is completed in the
optimum time for both parties.
Q
Will the lawyer checking
my franchise agreement be
able to assist me with other legal
documents, such as leases?
VICKY WILKES WRITES:
Before entering into a franchise
agreement, you should take advice
from a specialist franchise lawyer,
who will understand the commercial
rationale behind the franchise
agreement and not waste your time
and money in getting into pointless
arguments with the franchisor over
key terms.
Equally, if you need to enter into
other legal agreements, such as
a lease, it’s sensible that the legal
agreements are reviewed by a lawyer
BRIAN
DUCKETT
is chairman of
The Franchising
Centre, part
of the world’s
largest network
of specialist
franchise
consultants.
JOHN PRATT
is senior partner
at specialist
franchise firm
Hamilton Pratt
and has advised
franchisors for
over 25 years.
VICKY WILKES
is a senior
associate at
law firm Squire
Patton Boggs
(UK) LLP,
specialising in
both domestic
and international
franchising.
SHELLEY
NADLER
is a legal
director in
Bird & Bird’s
international
franchising
team and has
many years’
experience of
advising on
all aspects of
franchising.
who is an expert in that particular
field - for example, a property lawyer
advising on a lease.
There may be some lawyers who
will be able to advise you in relation
to more than just your franchise
agreement, but you should ask your
chosen lawyer what their areas of
expertise are. You could also ask
for recommendations for a lawyer
from other franchisees within your
franchise network.
Q
Is it a good sign that a
franchise recently launched
in the UK is active in other
countries?
SHELLEY NADLER WRITES:
Yes. It may be that a franchisee can
take advantage of an internationally
renowned brand or a unique concept
that was not otherwise available in
the UK. This doesn’t mean, however,
you should accept that because a
foreign franchise has successfully
transferred to other international
markets it will work in the UK.
There have been a number of
franchise brands - particularly from
America - that have come to the UK
following international expansion
that have not been successful in
the UK. In some cases, it has taken
several attempts before the franchise
has proved successful in this
country.
It can be difficult to transplant and
operate a franchise in a new country.
The franchisor in the UK may be
a master franchisee appointed by
the foreign franchisor or the UK
subsidiary of the foreign franchisor.
In each case, the master or
subsidiary should have carried
out extensive market research to
ascertain if there is a market for
the goods and/or services offered
by the franchise in the UK and if
any adaption is needed for the local
market.
The UK master or subsidiary
should have operated the franchise
itself through a pilot operation
to test whether the business is
viable in the UK and fine-tune the
operational side to conform to the
local environment.
A potential franchisee should ask
how the franchise has been modified
for the local market and for evidence
of the results of pilot testing by the
UK master or subsidiary.
32 MAKING MONEY