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We ask Andrew Cutler, Sales Director of leading greeting card franchisor, Card Connection, some of the questions you always wanted to know about franchising but were afraid to ask.

1) Franchising sounds great but is it too good to be true?

If something sounds too good to be true then it usually is! However, as an industry, the franchise sector is growing because it provides people with the opportunity to run their own business at a vastly reduced risk than going it alone. Note, there is still a risk with running any business so proper research on your part needs to be undertaken to reduce this further. Choosing a British Franchise Association member franchise that is established in its sector will help considerably. This is because all BFA members are bound by a code of ethics which are designed to protect franchisees.

2) But seriously, how much will I earn?

This will vary depending on the type of franchise and whether it is designed to be a full or part-time business. It has been known for franchisors to exaggerate likely or ‘on target’ earnings. Therefore, don’t rely on forecasts but ask for evidence of what other franchisees have earned in the past.

To find out the truth, you should talk to existing franchisees. Obtain copies of their accounts and go through them with a fine tooth comb using the help of an independent accountant. Remember to take into consideration borrowings to purchase the business in addition to ongoing expenses like training, expenditure on vehicles, fuel, equipment and stock. Balance this against the number of hours you will need to put in to earn a sustainable income.

Be realistic and imagine the worse case scenario. It is also worth finding out why an outgoing franchisee is really leaving. If you are purchasing a virgin territory, remember it will take longer than you think to get the business up and running so you will need to manage cash flow carefully and ensure you have the funds to cover this challenging time.

3) Who are your best performing franchisee and why?

At Card Connection, our most profitable franchisees are those that manage a small team and have several liveried vans on the road delivering greetings cards to retailers across their territories. They all have one thing in common – a certain grit and determination combined with the desire to maximize the profit from their franchise businesses. They are ‘can do’ people and their enthusiasm and customer skills, carry their businesses forward. Those with some management experience tend to have a head start, as they are already confident working in this type of environment. We can train our franchisees with the basic skills to run their operations, however, it is their ability to keep striving for more efficiency and profit that makes our very best performing franchisees stand out.

4) Why do some franchisees fail?

Generally franchisees fail for 5 main reasons:

• 1) They may have chosen an unsuitable or unprofitable franchise in the first place, so research into winning franchise operations is key to success here. Find out where your customers are going to come from and see if there is an existing ‘sales pipeline’ to work with straight away.
• 2) The franchisee did not have or was not trained in the right skill set to manage a business properly. Be realistic about the type of business that would suit you and find out about what level of training is on offer.
• 3) Unfavorable market conditions affected the business. This might include the arrival of a new ‘competitor’ on the scene, with a better product. Consider if you regularly use the product or service you are planning to offer? If not, beware!
• 4) Lack of support from the franchisor, which includes marketing and brand awareness. Find out how the franchisor maintains its place as the market leader. If you are not looking at joining the market leader in your chosen sector, think again very carefully!
• 5) The franchisee didn’t put the right effort in. Be under no illusion franchising, like running any business, is hard work and requires total commitment. It also needs your family and friends to be supportive and behind you every step of the way.

5) What makes a good Franchise?

There are a number of points that all the best franchises have. Firstly, it has to make a sufficient profit! At the end of the day you are franchising to earn a living and so a franchise that generates sufficient income is a must.

Secondly, the qualities of a good franchisor are important as these are your back up team. The franchisor should be established and provide excellent initial and ongoing training. The head office team should be approachable and on hand to help you whenever you need it. They need to be professional and always have their franchisees’ interests at heart.

A brilliant product or service is a given, as of course is a steady stream of customers waiting to make that purchase!

6) How do I know if franchising is for me?

The simple fact is that franchising will not suit everyone. On the one hand, it has all the advantages of running your own business. The support of a good franchise partner will help you, yet it means you are never totally on your own. You will need to follow the company manual and procedures which have been honed over the years to make life easy for everyone. This suits a great many people however, to find out if franchising really is for you, arrange to spend a few days ‘on the road’ with a franchisee to find out precisely what the day-to-day job entails.

Because a franchise will become your own enterprise it is important you enjoy the work as you will need to maintain your enthusiasm over the long term!

7) How is the franchise industry faring in the current economic situation?

There is no doubt about it, some franchises are struggling in the current economic climate. However, this is not the case across the board, so look at the accounts of your prospective franchise to verify what your chosen franchisor is telling you about how the business is faring in the current economic climate. Remember the luxury goods sector will always struggle compared with ‘must have’ products or services in difficult economic conditions. However, any excellent, quality product or service with good customer service marketed properly and supplied at a reasonable price will keep customers coming back for more. Do keep in mind that customers are more price conscious than ever but the ‘pile it high sell it cheap’ business model does not develop into a lasting business.

8) What are the biggest challenges the franchising industry faces today?

Beyond the current economic situation faced by all businesses, the biggest difficulty for franchisors is actually recruiting good quality franchisees. Reliable, committed enthusiastic individuals with the vision and energy to drive a franchise business forward are in short supply! If you are a prospective franchisee however, this is a great opportunity for you. It means if you are good, you will have the pick of the best franchises available. Your job is to separate those who merely promise the earth from those who offer a sound and profitable business model. Good luck in your search!

Card Connection currently has limited vacancies for franchisees who are keen to run an expanding business. Successful candidates would ideally have some management experience as, once established, they would be expected to employ a small team, operate a warehouse and have several liveried vans on the road.

Article first published on Franchise Direct: www.franchisedirect.co.uk

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