Before You Buy a Franchise

Most people who buy the wrong franchise did not do the wrong things. They did the right things incompletely. This episode gives you the version of franchise due diligence that actually protects buyers, not just the version that ticks the legal boxes.

In this episode of The Human in Franchising, Belinda Bradley and Julie Taylor cover the complete due diligence framework for franchise buyers. Including the one piece of information most AI tools and US-sourced guides tell you to request that does not legally exist in the UK context, and what to do instead.

WHAT YOU WILL LEARN 

What a franchise discovery day is designed to do, and what it is not designed to surface

The Franchise Fit Matrix™ from the buyer's perspective, what it actually measures across five dimensions

The Relationship Readiness Five Questions, the due diligence most buyers skip and why it predicts their experience most accurately

What the ramp-up period actually costs and why almost nobody prepares for it

Three things to do before you sign, regardless of how long you have been in the research process

RESOURCES MENTIONED 

Franchise Fundamentals Programme, eight modules for serious franchise buyers. £222+VAT: Publishing in July 2026.

Before You Buy a Franchise Guide, free. The honest UK-specific guide for buyers: 

Before you Buy a Franchise Guide

ABOUT THE HUMAN IN FRANCHISING 

The Human in Franchising is the podcast that tells the honest version of franchising.

Hosted by Belinda Bradley and Julie Taylor, 60+ years of combined franchise experience across franchise model design, franchisee recruitment, buyer education, and network development in the UK and internationally.

Honest. Grounded. Commercial. No hype. No easy answers.

FREE RESOURCES 

Franchise Readiness Assessment, free

Before You Buy a Franchise Guide, free

THE COLLECTIVE

Private community for franchisors, franchisees, and franchise professionals.

Free monthly masterclasses included. £33+VAT/month

SUBSCRIBE - The Human in Franchising Podcast

New episodes every fortnight on Thursdays at 11:11 CEST.

FIND US 

Website: runofranchising.co.uk

Landing page: runofranchising.co.uk/podcast-the-human-in-franchising

LinkedIn - Belinda Bradley

LinkedIn - Julie Taylor

LinkedIn - Runo Franchising

LinkedIn - Franchise Energetics

Email: hello@runofranchising.com

AI will give you franchising information. It will not read the brand, the numbers, or the person. That is the product of decades inside the sector, and a methodology built around the humans franchising depends on.

 Runo Franchising incorporating Franchise Energetics · Runo Ltd · Company No. 14379622

#franchiseuk #franchising #franchiseenergetics #runofranchising #thehumaninfranchising

Transcript

SPEAKER_02 0:19

When people buy the wrong franchise, they didn't do the wrong things. They just didn't do what they needed to do completely. The franchise buying process has commercial incentives for both the buyer and the seller. Everybody wants it to work well, and there's the franchise law's point of view, and there's the franchisee's point of view. Yep. It's a long-term relationship, and and and it's like a marriage. It's a relationship between two parties. I'm Julie Taylor. And I'm Belinda Bradley. And this is the Human in Franchising podcast. In the deciding stages of the relationship, you've got franchise trying to look good in the eyes of the franchisee, and you've got the franchisee trying to be on their best behavior to make this work. I think you know it's it's got to be a balance between the franchisee coming in and saying, Hey, can I have a look at your franchise? I'm thinking about buying one. And the French, but they forget that the franchise or on the other side is thinking, Well, hang on a minute. I might not want you in my franchise. I want this to look good, but I'm, you know.

SPEAKER_00 1:37

I wonder if we shouldn't just also redefine what this relationship is all about in the two parties involved. So where you've got the franchise or who is the owner of the intellectual property, they they have already run a pilot operation, they understand what goes on, they um they have a blueprint that works, it's been tried and it's been tested, they've got operations manuals that have come from their pilot operation, and they sell a franchise. What they're actually selling is the rights to access the blueprint to another party. In this case, that's the franchisee. So the franchisee buys access to this to this blueprint.

SPEAKER_02 2:19

Well, hang on a minute, because one of the things that you hear a lot in franchising is franchises are awarded, not sold. So when a franchise, and this is where it's interesting because franchise come franchisees come along and they think, well, I'm paying you good money, I'm buying your franchise, and I'm helping you to build your brand. And the franchise will say, No, hang on a minute. I'll decide whether you're coming into my franchise or not. I'm gonna, I will award franchise to the right people. That's how it should work, doesn't always. But that's how it's like.

SPEAKER_00 2:54

That's how it should work. But going back to that dynamic between the two, the two, the two, there's there's two different responsibilities. You've got one who owns intellectual property and who decides how that intellectual property is used and who can use it. And then you've got somebody who comes in and wants to buy the blueprint because it is a faster way to making money. Oh, absolutely. It it can't, you know, it the brand the brand is already established, the uh methodologies are already established, it's a faster track to making money. I sometimes heard it being sort of and sort of um described as like the toll, we're taking a toll road. You know, you can you but both roads, the original road and the toll road, will both get you to a destination, but the toll road has a bit of help along the way. It's a slightly smoother ride, um, and it'll get you there a little faster. But the the destination is the same, and franchising is a bit like that. Yeah, you can't you don't have to buy a franchise. You can go and open your own business and figure it out yourself. But if you want to buy a franchise, that comes with some rules and regulations in order for it, you know, in order to guarantee not guarantee its success because it's not guaranteed, but in order to ensure consistency across a network, there are some rules that have to be applied. The franchiseur is the party that decides what those rules are. The franchisee coming in, who may who is awarded that franchise, needs to be prepared to work according to those rules.

SPEAKER_02 4:19

Absolutely.

SPEAKER_00 4:20

For that, for that, they pay an initial fee when they come in, a franchise fee, and they pay to set up their business, which they would have had to pay whether they were setting up their own business. And they pay an ongoing royalty or management services fee as it's commonly known. And what is that for? That's that's paid because they continually access the blueprint that makes them money. And that's the franchise's income stream because he reinvests that into the support network, into the research and development, all the areas of responsibility that are the franchiseurs. The franchisees uh responsibilities are to follow the blueprint and to stick to the guidelines that are underpinned in the franchise agreement, which is the agreement that um that regulates and that um keeps control over this relationship.

SPEAKER_02 5:15

I think I think what also needs to be clear to franchisees when they come in is yeah, okay, you're coming in and you're going to have somebody to create this blueprint, or they've created this blueprint, and you are going to now follow that blueprint, but they forget that the franchise or needs to make a profit as well, because this is where he's earning his money. So when you come in and you think, well, you know, why should I pay the franchisee 5% of everything I make, or 10 or 15 or whatever the percentage is, you've got to you've got to establish and be very clear about what am I getting for my money when I'm paying you 5% of everything or 10% of everything? What do I get? You get the rights to use a group, to continue to use the blueprint, you get the support from the franchise all. Yes. And and you've got the community that you're joining that is a you know a useful community in terms of everybody doing the same thing.

SPEAKER_00 6:17

And you've got access to a blueprint that will fast track you to profitability rather than you figuring everything out yourself.

SPEAKER_02 6:24

That's right. One of the one of the analogies, your toll road analogy is quite interesting actually. Because one of the analogies that I use is if you start your own business, and if you if you and I've done it, I've been in a room full of people that are they're all um business owners, and you say to them, right, okay, so everybody who owns a business in this room, put your hand up if you've never had a problem in the first three years. And of course nobody puts your hand up. You have the clever so-and-so who puts their hand up. But in the main, nobody puts their hand up because they've all had problems. What the franchise ore has created with his blueprint is a point where, after that three years, they've had all the problems, they've walked through the mud, and now you're buying in at a point where you're not going to have those problems. So you can grow faster than the franchisee, uh the franchise ore did in the first place.

SPEAKER_00 7:23

Yeah, I think it's um it's you know, the heavy lifting's being done. Yeah, absolutely. So there we are.

SPEAKER_02 7:29

So some clarity around that is is really good.

SPEAKER_00 7:32

Good understanding of what the roles and responsibilities are in this relationship. There are two parties, they've each got a defined role to play, and everybody understand each party understanding the part that they've got to play in it, yeah is is uh is is a sure way to success down down the line. Um when that is not when you're not clear on it and it that's never been explained, um one starts to wonder why should I pay fees? Why should I do this? Why should I do that? So yeah. So the clarity needs to be there. Absolutely does.

SPEAKER_02 8:04

You've you've seen I've I've worked predominantly in the UK market, but you've seen other other markets. Yes. So talk to talk a little bit, Melinda, about what you've seen in other markets that are more regulated than the UK.

SPEAKER_00 8:22

Yeah, well, the UK franchise market is not a regulated market. So that means there is no specific law that governs franchising. There are a few best practices, but that's what they remain. And franchise associations like the BFA will have a code of conduct and they will have some best practices, which generally are founded in international franchise associations around the world. So it's an international best practice that's adopted by individual countries, but there's no law that governs how franchising must be operated in the UK. In other countries around the world, it is more regulated. And so you find that in in the US, for example, every single one of the states has its own regulations around franchising. Um, South Africa has their own uh regulations around franchising, Australia is regulated. There are parts of Europe that are regulated as well. And what that generally means is that franchising is governed by certain laws that require franchisors to behave in a certain way and to disclose certain amounts of information, and that varies from country to country. In the UK, there is no requirement to disclose anything. So it's really the onus is on the buyer to ask the right questions and to do their due diligence and to come to uh to a to a decision. Um and so yeah, one could argue that's good or bad. Um it just means that franchise can, you know, have have no sort of a resistance in setting themselves up.

SPEAKER_02 9:50

We do, but then you've got you've also got to think in the UK, we've got contract law and we've got retail laws that that govern how businesses work. So so there is there is some sort of adjudication, if you like, but you you've got to it it's in with other businesses and other things. But it is there.

SPEAKER_03 10:10

Yes.

SPEAKER_02 10:10

So so you've got to understand that that's where you're coming from. I think one of the things that we've found, especially in this age of AI, you know, you you go to um you you go to Chat GPT or whatever it is, and you're going to do some research, and then they come to us and say, I want to know what what your big your top franchisee is earning, and I want to know what your um FDD looks like.

SPEAKER_00 10:40

Yes.

SPEAKER_02 10:40

They don't know what an FDD is, yeah, yeah. And you can't tell them what the top franchisee is earning because it's you you're contravening the GDPR laws. Yeah, yeah. So what what kind of thing what what does that do in terms of making the buyer feel uncomfortable that you're not telling them everything that they think they need or should know?

SPEAKER_00 11:06

I think um look, buyers um you know come in and have to do their own due diligence, the onus is on them and to properly educate themselves before they enter into a market such as this. And so that that part of it is is the onus is on the buyer to do that. And certainly if you're gonna make a sizable investment, which a lot of franchises require, uh, then the then you owe it to yourself to do that educ, you know, to do that homework props, right? And to become a little bit more educated on the sector that you're gonna enter. But just to go back to the sort of franchise disclosure document, which is very much a US requirement, and it has various names in other countries, South Africa, they call it just a straight disclosure document. Australia have their own version of that, and there's various other ones uh in in Europe as well. And there are sp you know specific legal requirements about what must be contained, how many franchisees, who they were, you know, the financial status of the franchise or needs to be disclosed even in some countries, even as far down as the detail of who the franchise, what the contact details are of these franchisees, even the ones who've closed down and are no longer or may have sold and moved on. Um that is not a requirement in the UK. So you're not going to find UK franchisors with FDDs. The closest you might come is a franchisor having a FIM, a FIM FIM, that is a franchise information memorandum. Um, it's best practice with most good consultants that when they are assisting a client to franchise their business, that a FIM will be drawn up because it is the document that will inform uh solicitors when when the franchise agreement is drawn up. So it is pretty much like a cross between a sales document and a business plan. And it contains certain information. And certainly it should contain the information that if anybody who was reading that document was going to use it to come to a decision about whether they would like to buy into this franchise, whether they'd like to consider it, there should be enough information in that firm for them to be able to arrive at that conclusion, you know, that that's what it is. And certainly that's what the disclosure documents are about.

SPEAKER_02 13:11

Yeah, yeah, yeah, absolutely. And of course, all of our clients. Yes. Other things.

SPEAKER_00 13:15

Yes, all our all our consulting clients, we build that in because it's just a case of, you know, beginning with the end in mind, a lot of clients then uh want to eventually expand their franchises internationally. And then if you haven't built the foundations right, that it, you know, it's difficult later on to evolve into disclosure documents where those are requirements uh in other countries. So yeah, uh, what we find though is when people are doing their research on AI, is that they are being um uh US law is being referenced. And so there's not a lot of, you know, if you don't have the insight into what is available and what what what should be done in the UK, you know, very often you you you know you're looking for things that don't exist in this market. And that's the that's the um the issue with not knowing what questions to ask AR and not being able to discern the information that comes back at you.

SPEAKER_02 14:05

Yeah, yeah, absolutely. Absolutely. It's uh yeah, it's it's really important. I think one of the things that that the part of the reason why we set this podcast up in the first place and and uh and the collective that we we've done as well is to educate buyers to get them to understand what they need to know before they go and throw themselves into buying a business that maybe isn't gonna suit what what what they should be doing. So it's it's important that that's the problem.

SPEAKER_00 14:38

This is all about education, and that's our mission, isn't it, Julie? You know, uh Runeau franchising, franchise energetics was developed so that we made sure people walked into situations with their eyes open and that they and that the proper amount of information, the real questions that should be asked, um uh and aligning the person, the human being, with the actual transaction and the actual um container of franchising, that that alignment was in place. So yeah, absolutely. Education is where it starts. And certainly in 35 years of doing this, where it's gone horribly wrong, where I've seen that happen, very often people would will say things, if only I knew then what I know now. Oh, yeah, and it's just it's just sad because actually that information exists, it's just about uncovering it and knowing where to go to find the information. And so people are in the right place here, because this is what we're sharing.

SPEAKER_02 15:30

Well, our our franchise fit matrix has the the elements of that, doesn't it? So so we've got in in the in the matrix, actually, um you can download a a guide that has our front part of our franchise fit matrix in it, but it's got financial readiness, it talks about operational capabilities, it talks about lifestyle compatibility, yeah, it talks about relation relationship readiness and long-term commitment. So they're all kind of in there in part, that is what you need to be sure about when you're doing your due diligence. Absolutely. Let's start with the financial readiness question. Where do you think that lies, Belinda?

SPEAKER_00 16:18

Well, you know, there's two parts to that. I mean, there is the part about being able to afford the franchise, what it's going to cost. You know, there are fees involved. There is a there's normally an upfront fee or a franchise fee as it's known in the UK. Uh, that is the money that is generally paid to the franchise or if they're not running a turnkey operation. Turnkey just means the franchise ore takes care of the whole setup versus a franchise or that allows the franchisee to take care of part of the setup. So there's there's no right or wrong, it's just a choice in what some franchisors um implement in their businesses. And certainly the bigger, more well-established franchisors run turnkey operations and the more emerging ones allow a little bit more leeway when it comes to setup um while not diverting from brand specifications and things like that. So franchise, you know, financial readiness is certainly looking at do you have the money to set it up? Have you do you have have you uh sort of worked out what it's going to be versus what money are you going to make out of the business?

SPEAKER_02 17:16

But there's also the other element. What's it going to cost you to set it up? But also, what do you need in place to run it until such times it starts to break even? Yep. So understanding the financial. What's called working capital, because you've you've got to put that into place as well. It's no good setting it all up and then running out of money in month six because your numbers didn't quite work.

SPEAKER_01 17:39

Yeah.

SPEAKER_02 17:39

And you've and you've not got enough.

SPEAKER_00 17:41

Or then being, you know, be sort of relying on the business to pay you a salary that's the equivalent of your corporate position. Um, because you need to live and you've got a lifestyle and you've got you know things you can't give up at that at a certain stage. And so that uh financial readiness has to also be considered. Can the business actually afford you? So one when one looks at what returns look like on businesses, um you've got to look at it what it what it would normally pay a friend, you know, a manager to run personally. And are you able to sort of downscale? Are you able to support? Can you live on that? Can you live on that wage? Yes. Um, and at what stage um and what goals are in place for you to achieve a financial the financial milestones, you know, that will enable you to eventually have, you know, and enjoy the fruits and the fruits of your labour and and all the profits and what have you. But is normally some sort of alignment in terms of financial readiness that has to be looked at there, you know, in terms of what the business can afford.

SPEAKER_02 18:41

And that's that kind of fits with uh a second one, which is operational capability. You know, you've you've got to understand what the operation is capable of delivering and what you're capable of understanding about the the blueprint that you're working with in and the model that you're working with in. And if you haven't got clarity on that and you don't align yourself with what's necessary to be done, then what's what's going to be, do you think, the impact of not being fully aligned with it and not having the financial or the um the operational capability, what's the impact on on your your turnover and your and your profit in let's say year two?

SPEAKER_00 19:31

Well, I think in terms of you know operational um you know alignment there, operational capabilities, it's really understanding how the money moves around in the business. Um, because every action results in a transaction. And so all those actions that the franchise or is going to be teaching you in for in training courses, for example, methodologies that should be adopted, kitchen flows if you're in a front in a in a in a in a food franchise, for example, um you know, how to do sales calls if you're in a service type type business and when you should do those. All those things have been mapped because they contribute to a level of success in the business and achieving certain milestones. So it's understanding that, and at what point are the milestones and what what do you what is your part in that? So, you know, operationally, if you're you if you're in a food the food sector, for example, a a big sort of one of the points that you really need to be looking at almost every day is is is looking at stock usage versus sales. It's you know, it's the thing that will affect, it's the biggest chunk of expenses in the business is the food cost. And if you are if if the food cost is not being managed and it has to be managed at store level, the franchise all can't manage that. So they can they can set prices from central kitchens, etc. etc. But the actual management of that happens in store operationally. It's all those, it's all those actions that happen operationally that can impact directly that that that that's and that's not just in milestone.

SPEAKER_02 21:08

That's not just in things like food or retail. It it also translates into, you know, if if you've got uh a domiciliary care franchise or a cleaning franchise or a a consultancy or you know, because you you your dominant product then is time.

SPEAKER_00 21:27

Absolutely. Managing the time is so incredibly important. You know, how much time is being allocated to sales, for example, and executing on on the business. So under it's really understanding what drives the money in the business and where you know where do you have to focus on. And in a lot of a lot of um more retail uh aligned businesses, you're gonna have things like point of sale systems, for example, which are are are going to track all the numbers for you. Well, if your manager knows more about what goes into that POS than you do. You've got a problem. Yes. So you can't be relying on things like, for example, well, I'll just put I'll put video cameras up to watch what people are doing. You know, for every hour your camera is recording, you've got to have an hour to to watch the video, in which case you might as well be there. So it you know, as far as that's concerned, the numbers will tell the story if you're if you're properly and and correctly tracking them. Yes. And so things like your point of sales system that that has reporting features, you'll be well advised to learn that properly, understand it, make that part of your daily reconciliation process and um and do that every day. Because to find out at the end of the month that you've got big shortages on certain elements of your business is almost useless. What are you going to do about it on day 30 when the problem originated on day two and you did nothing about it? So you you you're already a month into the problem and you're probably going to start the next month with that same problem. So it is really about understanding where the controls are in the business, the tracking is, and that's very much an operational point of view, and it's not something that is always thought about.

SPEAKER_02 23:10

Yeah. No. Like what you what you actually have to do, what are those actions? And you've got to understand that we're going back to the blueprint again. Absolutely. That the blueprint is a structure. Yeah. And that structure is there, and the and the systems and processes around that are structured to enable you to make money.

SPEAKER_01 23:29

Yes.

SPEAKER_02 23:29

And yes, but and and obviously the franchise all wants to make money as well. So it's in the franchise all's interest for you to follow that blueprint and for you to make money, which is all, you know.

SPEAKER_00 23:41

So it's to convey that message also to the staff, because very often, you know, there's a load of rules and regulations, and and you you've got to do this and you mustn't do that, and stand like this and wear that shirt and put this in that box and fold the packet like this. And there's a whole lot of methodologies that go around. But generally speaking, every one of those methodologies and procedures, policies and procedures in the business have been designed so that you can properly execute on marketing messages that are that are national or global messages, that you can deliver consistency, because when you deliver consistency, you attract more clients. Clients know what they're gonna get. They know every time they come they're gonna they're gonna get a certain thing. And so those actions that have been written into policies and procedures are really contributing to overall success. So that sometimes you've got to explain to staff why and and how, and you've got to be on them. You know, it it managing a teams of people to be able to execute on the operation is no mean feat. You know, that requires a bit of skill.

SPEAKER_02 24:41

Yeah, um, you do have yeah, if it is a franchise where you are employing people, you've got to either learn very quickly to be a good leader or have those leadership skills to start with. Yes, and that kind of starts to come into the the next dimension, which is lifestyle capabilities. Because if the lifestyle that you need from this determines that you need to be a leader of a team, for example, yeah, or uh, you know, a leader of people, then you've you've got to understand how that's going to fit into the whole dynamics of the business. If the blueprint is just for one person out there driving a van and being on their own all day, that's absolutely fine. But then again, the lifestyle compatibility falls into that because if you are going to be out in a van all day and your your area is too big, you're driving too far, your time is spent driving rather than delivering the product or the service that you're offering, then that's a that's a different problem altogether.

SPEAKER_00 25:54

Yeah, it leads me also back to those more retail type outlets, because you know, um the operational hours in retail and in fast food and in restaurants, for example, are not always hours that are um that are easy to deal with if you're a family person, if you've got you responsibilities at homes. You know, you're often busy at times of the day, which are at night or you know, weekends, for example, Friday evenings, that kind of thing. And that's your opportunity to affect the most amount of customers. Yeah. Because that's when you're busiest. So not to be there, not to make sure that your business is running optimally at that time when you've got the opportunity to influence so many people, you can imagine if the opposite was true. If it was going wrong, you weren't there, people weren't being served properly, you're affecting the biggest chunk of people coming through, your biggest customer base. So your lifestyle and what you're prepared to do, if you, if you, if you're not prepared to do the hours that the business requires of you, or or travel the miles that it might require of you, or whatever the case might be, you know, um, then you know, sometimes that's overlooked. So this element, this dimension is a very, very important one because it can lead to misalignment.

SPEAKER_02 27:12

And that's that's why some franchisors will insist that you actually live in the area where you where your business is running, so so that you're not disjointed from it. In fact, one of I'm at the moment I'm in the middle of writing our um territory and territory intelligence um guide for um for our masterclass. And and so I've got very prevalent in my mind at the moment the fact that if you've franchisors very often in and franchisees will want big territories to encourage people into the franchise. And that's not always good because you know, from the franchisees point of view, you've got this huge territory that you you know, you've your territory's that size, yeah, you know, yeah, and you and you uh for those of you that are listening, sorry, but um your territory's big and and the area that you're covering within that is is tiny, yes, then you've got this whole area where the brand's not being exposed to the customers there, and so you're you're limiting the brand.

SPEAKER_01 28:18

Yeah.

SPEAKER_02 28:19

So, but franchisees think, oh, I want lots and lots of people and lots of lots of um whatever it is that you need in an area. And that's not always the best thing from for either person, and from a franchisee particularly, if you've got to spend hours in the car driving to your customers because you you've got this huge area, then you're the effect of your business is going to show very quickly. Absolutely. So again, that's kind of structure and lifestyle stuff, because you're going to come home absolutely shattered at the end of the day and you haven't really done much, whereas if you've structured it better and followed the blueprint on a smaller space, then you'd you'd be in a better in a better place. What about the the the aspect of relationship readiness?

SPEAKER_00 29:09

Well, certainly, you know, you you've got relationships at home that uh that are you know responsibilities that you have towards the relationships at home. Do you have the support structure around you? Running or starting any new business is no mean feat for anybody, let me tell you. So whether it's your own independent or a franchise, it comes with a lot of responsibility. It's going to require a certain level of dedication and commitment. And your support structure, your family uh support around you is is is hugely important. And your activities are going to impact on them. So, you know, when making a decision about um buying a franchise, certainly you need to look to that support structure, make sure they're involved in the decision-making process and that everybody understands what it's going to take and require in terms of um commitment from from certainly the franchisee.

SPEAKER_02 30:01

Yeah, yeah.

SPEAKER_00 30:02

And certainly for the first period of time, you know, any business takes a while to get to its to get to its um peak points. And so it may not be like that forever, but certainly in those early days when you're nurturing a business and you're growing a business, you know, you it it does take time and and and um dedication, really.

SPEAKER_02 30:19

Yeah. And even when you're c you're coming into a a franchise where you've got the blueprint and yes, you haven't trawled through the mud or you know, you've taken the toll road rather than the other road or the analogies we've used. Yes. You've still got to be dedicated and spend a lot of time in that business to get it off the ground. Absolutely. At that stage, at that stage as well. So the the the dedication there and understanding what it is you want to achieve at the end of it is really, really important in terms of your lifestyle compatibility and your relationship readiness, because the whole thing's got to be taken into account.

SPEAKER_00 31:00

I think when you look at the level of investment that it requires to start any business, but certainly in a franchise, um, it's often the biggest investment people make, or very close to the biggest investment people make. And I've um I've heard it said before, you know, if you're not prepared to sort of nurture that investment, because that's that's the role you're taking on, is nurturing your own investment uh according to a plan that you put together originally. Um I've often heard it said, well, I'll just put a manager in place and um and that'll solve a few problems. Uh and I it was one said to me and it made a lot of sense, you know, if you took the same amount of money that you're about to invest in the franchise or in the business, whatever it is that you're buying, would you and you bought a motor vehicle for the same value, would you give the keys to the manager to drive?

SPEAKER_02 31:46

Yeah.

SPEAKER_00 31:47

And most business owners would say, absolutely not. You know, um I don't know that I would trust anybody to do that. And so think about that in terms of the investment and and who you allocate and delegate to, um, and what checks and balances you've got in place, you know, in terms of are your and and you know certainly if you've got your family around you and the family are involved in the business, the other thing you've got to you've got to look like, look at look after is the family relationship because it is a business primarily, and um and families, you know, um need to be prepared to take on their goals in that business.

SPEAKER_02 32:25

What do you and your family want from this business? To yes, what's the end game? Where where are you going with this? And you need to, I always think you know, an important thing is is to start the business with the end in mind. Absolutely. What is it that you want to to get from that? Sure, sure.

SPEAKER_00 32:43

But also when if you are going to embark on a family-run business, the relationships will be impacted from a from a point of from you know from a from a you know from a business point of view. And um and having those awkward conversations ahead of time, who's going to make the decisions? Is everybody comfortable with what might have to happen here? Yeah. So before you start, you know, delegate the roles out as though you were employing people you didn't know. And and make sure everybody understands that, yeah, for sure. Um, I think I just wanted to share a story really uh at this stage, um, which really um describes a franchisee I encountered many, many years ago in my early, early days in franchising in the fast food sector. Um back in South Africa? Back in South Africa, yes, yes, in in KwaZulu-Natel in uh in Durban. And um he owned, he he bought a franchise, a a fried chicken franchise, and he um got into it, he understood what his part was, he attended the training, it was a very good brand, um second biggest in the in the country at the sta at that stage, um, and had a very a very good site. So location was all good. But what he did really, really well was he understood what his end game was. So he went into it knowing that at some stage he wanted to sell out. And he wanted to sell out at the point at which he had accumulated enough money and profit, you know, from the business, um, that would allow him to, you know, uh travel the world on his Holly Davidson. That was his dream. Uh two and a half year trip, he'd planned the whole thing out, he knew where he was going, he knew what it was gonna cost him, and uh and he knew what that number was, what he needed to achieve. He knew also that it wasn't going to take, wasn't gonna be possible out of one store. It was never gonna be possible out of one store. So when he made his decision about buying the business, he knew what the business was going to require of him and his input on a daily basis. Back in those days, you know, there were there wouldn't there were no not even cell phones. So, you know, mobile phones didn't exist. So everything was done sort of quite sort of primitively.

SPEAKER_02 34:49

Did you know how many stores he needed?

SPEAKER_00 34:52

He did, well, he he had he had worked it out. He knew it was going to be somewhere between 10 and 12, and he knew that it was going to take him somewhere between eight and ten years to achieve. So he was gonna have to build a store up, use that as leverage to get the second store, use that as leverage to get the third store. Uh, he came into the franchise in the early days, so there was still a really a lot of really good sites. He proved himself to the franchise all, which was great. So the franchiser was very happy for him to become a multi-branch operator, which uh that's quite a big thing. Which is a big thing because you know you're not now dealing with one business. You know, if one business takes 100% of your focus and now you've got two, if they're not running optimally, you've diluted it 50%. So and the same goes when you when you go beyond that. So you can imagine for 12, it's it's it's quite an operation. Um, anyway, he he kind of knew what he had to do. He knew had very good management teams in each of the businesses. He was there every day, so he visited all the stores every single day. He checked the milestones, he checked the KPIs, he was he he knew what the what the um how the money moved around. And so he had checks and balances all the way that he would go and check. He never just took a stock take for granted. So if somebody had said we'd we'd counted the stock, in case they were rolling stock, he would go in and do spot checks on that stock. So he knew exactly you know what what the where the loopholes were, and he made sure that the bucket that was catching all the money didn't have any holes in it. So that was that was a job he found. So he kind of made it his mission very early on to know what he didn't know.

SPEAKER_01 36:27

He had to learn.

SPEAKER_00 36:28

That's a bit to learn that. That's a bit and he was prepared to take that on. So in the training process, you know, all of that was revealed. Well, like this is what you've got to do every day to make this a success. He understood that was gonna take a lot of time and dedication, but he said, I'm gonna give myself a certain period of time and I'm prepared to do what it's got to do what's got to be done because that's my dream, that's where I'm gonna cash out. And, you know, to be honest, Julie, he did. He he sold out after 12 stores, he accumulated a massive money. Um he was able to.

SPEAKER_02 36:58

How long did it take him to do it?

SPEAKER_00 36:59

It was about eight or nine years. All right. Yeah, it was he he he was able to achieve it. Yeah, and he um and he was able to do, you know, live his dream, do the Harley trip, come back, buy himself a really, really beautiful home overlooking the Indian Ocean on the East Coast, and set up his import-export business, which he kind of still runs today, and live the life, basically. Met his met his lovely wife in Brazil on his travels, and uh and they lived happily ever after. So it was a it was a you know a story that that had a really, really happy ending, but it really had that happy ending because he made it his mission to understand the part he had to play, and he acted on it. He didn't he did he didn't relent on it at all. And that's important, yeah. Yeah, absolutely.

SPEAKER_02 37:43

Yeah, it is, it is. So so the next one is long-term commitment. Yes, and I I think, you know, I I said earlier that one of the things that you can kind of one of the analogies that you can use with this is it's a bit like a marriage. Yes. You're coming into it, you've you've got to at least like the person. One would hope.

SPEAKER_00 38:08

That would be helpful. Yeah.

SPEAKER_02 38:10

Yes. Um yeah, so you've got to trust and that there's there's this two-way dynamic that's going to allow you to build your business under the umbrella of the meeting of minds, or yeah, yeah. So when you when you start talking to and and doing your due diligence around, you know, is this the right franchise for me, you've got to look at whether you whether you like the franchise or whether you you like his ethics, whether you understand the culture of the business and the and the structure of it.

SPEAKER_01 38:42

Yeah.

SPEAKER_02 38:42

Talking to franchisees is really important. But if you've got franchisees that are um in a different place to you, don't just assume that just because you've got they're not making loads of money, they're not the top franchisee, that they're not making, they're not meeting their goals, and they're not um aligned with what they're doing. Because if if they let's say for example, you've got somebody who comes in, they want their own business because they've got a job, highfalutin' job, they're getting paid a lot of money. They don't really care now how much they get paid, they want to see their kids grow up, they want to take the kids to school, they want to see the school plays and things like that. So they're not making as much money as maybe somebody whose goals are different to them.

SPEAKER_00 39:35

Yes.

SPEAKER_02 39:36

But they feel that they are really successful. The franchise is all happy because they're doing what they want, they're making a profit, he's making money or she's making money. And and and it's a big thing. So you've you've kind of got to go into it in in terms of understanding what your what your goal is to get to get out of this. So your due diligence is is massive in terms of making sure that you you're getting the the right the right information. Yeah. But you've also got to think that this is a long-term thing. So you're not just coming into this for a couple of years. No. You're generally coming into this, I mean, with some of the bigger ones, you're coming into for 10 or 20 years. Exactly. Contract. You know, absolutely. Generally in the UK, it's around five, seven, I think some of them are moving up a little bit, but it's it's it's a long-term commitment. So the marriage part is great, but the divorce part is really ugly and really expensive. And rather messy. If if you're trying to get out of it at a point when, you know, you've you're only part of the way down there. So you need to make sure that you've done all of your due diligence, not just on the territory, which is massive, but on the on the business itself. And but just because you've done everything right doesn't mean that you're there because you've got this readiness in in within the sort of relationship readiness and the and the long-term thing that you need to understand. And the best way I can explain it is we had a a franchisee, uh this is a long time ago, um, and he'd done everything. We knew he'd got the money, he'd he'd spoken to a solicitor about his franchise agreement. All of the things that we told him to do, he'd done his his territory research, which is you know really important. He'd he'd got the shop set up, everything was ready. He'd done the training and he'd done really well in the training as well. Yeah. Came to the day when he'd got to um, you know, this is great, we're gonna start trading. Yeah, he couldn't unlock the door. I'm always he just sat there, he could not unlock that door, and he never did. He didn't unlock it. And it that is so sad because if he'd asked the right questions and been asked the right questions, then you know, you you've kind of got double trouble because he's he's spent a lot of money and he's now he's never going to run this business. But the franchise own now has a shop in an area where they've advertised that this is going to open, yeah, and it doesn't. So it's it's a brand damage as well. So so you've kind of got this this real, you know, if you've been asked the right questions, and I have to say, hand on heart, you know, in my early days of recruiting franchisees, I sometimes didn't ask the right questions either. And I was under pressure to get a certain amount of franchises in in the in the year or or whatever, because the franchise always growing the brand. And sometimes mistakes were made. Now, with the way that we're doing it, we are being very careful about making sure that people are aligned with the brand, that they understand what's going to happen, they're doing their due diligence, we make sure their financial readiness is right, and as as best we can.

SPEAKER_00 43:01

And that they're right, and that they are prepared for what's coming. Yes. So that they don't get into a situation like you've just described, where um, you know, a whole lot of limiting beliefs and self-belief gets in the way of being able to take the next step for sure. Absolutely. Absolutely.

SPEAKER_02 43:18

So so there are certain things that that I look for now when I'm recruiting. Yeah. And I know that you're teaching this with people that we're talking to when they want to franchise their business. Yes. Is sort of, you know, are you clear about what you want to do? Yes, how you're going to do it, and what's expected of you. What's your part that you're going to play? Yeah. What's the part that the franchise all plays? What's the part that everybody else plays in this? Yes. And there's there's got to be some real clarity around that. You've got to be aligned with what you want to buy, um, like your Harley Davidson. And he knew what he was buying. You've got to like and trust the brand, you've got to like and trust the franchise, all you're going to be working together for a while. And you've got to feel comfortable within the the culture of the business is really important.

SPEAKER_00 44:13

And the product and service. And the product and service.

SPEAKER_02 44:16

If you don't like the product, I had a guy the other day actually, um, who said to me, he was looking at this particular business, I won't say what it was.

SPEAKER_01 44:23

Yeah.

SPEAKER_02 44:24

Um, and he'd been exploring it, and that the figures were right, and it it he could have the area he wanted, and it was all there. Yeah. But he didn't like the product. And I said to him, How can you buy a business and not like the product? Yeah, he just didn't believe in it. Well, well, you're not aligned with it. There's no alignment there at all because he he didn't like the taste. It was a food and he didn't like the taste. So, you know, how can you go and say, Oh look, I've got this great business? Yeah, yeah, but I don't like it. Yeah. So um, so you know, you've got to look at this the structure of the business. Does it fit with your lifestyle? Do you understand what's what's coming? You know, as you said earlier, Belinda, the hours. So, you know, if if you've got to work evenings and weekends, but you want to take the kids to football and parties and everything else in the evenings and weekends, yeah, you're not going to go into your business. And that is really going to show in year two, that will show. Absolutely. Yeah. Because you'll start to have this problem where you're not dedicating enough time to the business. So it will it will very quickly start to show you.

SPEAKER_00 45:34

The consequences of not doing what's required show. And they come through very clear. And normally in the year two, sort of when you think, well, why am I not making it that much? You know, I'm not doing the numbers I'm supposed to be doing. It goes back to those actions, doesn't it? Or you're doing the actions that drive the numbers, you know.

SPEAKER_02 45:51

And and and activating everything that you can. So the activation comes around your activation in terms of activating the skills that you need to have, learning the skills that you need to have, but also following the blueprint, activating the marketing, doing the recruitment, making sure that you're bringing in enough customers, what whatever it is you're doing, recruiting staff. Yes. You know, and managing stuff. And managing staff, managing them as well. So so all of that needs to come into it. And and that kind of looks then at sustainability for everybody.

SPEAKER_01 46:30

Yes.

SPEAKER_02 46:30

So sustainability for you as a franchisee, in terms of, you know, you're going to start this business, it's got to, it's got to succeed. The franchise all wants you to succeed. So he's looking for sustainability. And he's looking for s sustainability across the brand.

SPEAKER_01 46:48

Yes.

SPEAKER_02 46:48

And what part as a franchisee do you play in that, in making sure that that brand is sustainable?

SPEAKER_00 46:55

It's a whole ecosystem, isn't it? It is, yeah. So for a franchise to to really flourish, and the you know, all the big well-known ones that we all know, you know, they they're based on a couple of principles. Consistency is one of them. Yeah. You know, they need to be, they need to be, you know, product and service and and all the rest of it needs to be consistently applied. You need to, franchisees, all branches and franchises need to consistently deliver on marketing messages so that so that the customer base is there, you know.

SPEAKER_01 47:25

Yeah.

SPEAKER_00 47:25

So consistency is is is everything, you know, in terms of franchising. If you don't get consistency right, you don't really you end up in a big mess, you know.

SPEAKER_02 47:33

And and that's where it becomes, you know, franchising to my mind, and I know you agree with this, is yeah, it's going to be a win-win for everybody. Absolutely. The the franchise or and the franchisee both have to win.

SPEAKER_01 47:44

Yeah.

SPEAKER_02 47:45

And both have to understand what part the other one plays. Absolutely. And there is a part that each one of them play.

SPEAKER_00 47:50

And the responsibility that that goes with that, isn't it? You know, so yeah, these are two different business models. The franchise all model is not the franchisee model. Yeah, that's true. Despite the fact that the franchise or may have their own company-owned operations, those operations are similar. But the franchise all model is a completely different business model to what the franchisee one is. Yeah, you know. And the two working hand in hand with support and and you know, research, development, brand development, positioning in the market space, everything, you know, research, all of that kind of thing is what keeps good brands positioned and occupying and continuing to command space. Yeah. And you need a good franchise all that's well resourced to be able to do that. So if you're not paying fees and you're not reinvesting, you know, back into that structure, you you again you've got a problem. So it's understanding what those what what the all those components are. What the dynamics do and the mechanics of the business. And the contributions that they make to the whole ecosystem, yeah, you know, and the success of it. Yeah, yeah, yeah. Yeah.

SPEAKER_02 48:55

Yeah. I think we've covered it. I think so too. Yeah. Okay. Absolutely. Before you go, um, and wander off to whatever it is you're doing later on today. There are some links below for um the the sort of guide that goes with this, the um franchise guide, uh, buying a franchise guide. There is a link, or there will be a link soon for the territory uh intelligence masterclass as well. Um, but there's definitely a link below for our um our new uh the collective space. Um go and have a look at that as well.

SPEAKER_00 49:36

That's our franchise community, it's our online uh space that we've created for all sorts of um from from every aspect of franchising. So whether you're a franchiser or a franchisee or a potential buyer or a buyer or a potential franchisee or just a franchise professional out there, that's um this is a space where everyone can learn from each other. It's all about educating um everybody in the in this in the sector, and it's about making an impact that is positive and contributing to a sector that is really a huge contributor to the economies all over the world. Yeah, absolutely.

SPEAKER_02 50:11

Absolutely. So if you are navigating any of the things that we've talked about today, if you want more information, then let us know. Obviously, all our details are below. Um if the episode was useful to you, then we'd love you to share it. If you can share it with just one person, if you could subscribe to our channel and like the the uh podcasts and videos that we're putting on there, that would be great.

SPEAKER_03 50:38

Yeah.

SPEAKER_02 50:38

Um, we're going to do a lot more of these. Look out for for what's coming. And it's goodbye from us.

SPEAKER_01 50:45

Goodbye from us. See you next time.