No-one should enter a franchise agreement without a clear picture of what they will need to do – realistic expectations – to build and run a successful business.

“A franchisor will often play down the challenges and stresses of running the business,” Greg Nathan, founder of the Franchise Relationships Institute says. “That’s why it’s vital you carry out extensive due diligence that includes talking to other franchisees.”

You should be prepared to commit fully to the business.

“That will often mean putting in substantial time and energy to ensure customers are being looked after and your staff are having a good experience,” he says. “You may be able to step back and work more on the business if you are running multiple units, though single unit franchisees often need to be involved in working in the business as well.”

It’s also important that you’re not undercapitalised and that you have a Plan B if sales are slower than anticipated.

“Cash flow pressures in the early stages of building a business are a common cause of stress,” Nathan says. “Family support is also absolutely essential, so ensure you involve your partner in the investigation process and discuss their level of commitment before signing the franchise agreement. You’ll need them to be positive and engaged with you throughout the journey.”

Fostering good relationships

A good relationship with your franchisor creates opportunities to learn from others who are further along the track. Here are Greg Nathan’s top 5 relationship-building tips.

1. Be prepared to attend local meetings and national conferences.
2. Participate fully when you’re there, taking notes and trying to get as much value as possible from the speakers and sessions. 
3. Don’t get drawn into political issues or groups where people are vying to gain power or influence. 
4. Conversations should always be built on a desire to gain and share information about how to better serve customers, improve your profitability or get more value from being part of the franchise network.
5. If you have a challenge or a problem you think is being caused by the franchisor, state clearly why this is causing you difficulty. If you have a suggested solution that sounds fair and reasonable, bring this to the conversation. 

Who is in control?

Franchisors may have most of the control but there are still areas where franchisees are free to make their own decisions. Here’s how that usually breaks down – though, once again, there will be differences from brand to brand.

The franchisor controls:

• branding 
• marketing and advertising
• research and development of new products and services
• the systems used for day-to-day operations 
• fees and other agreed costs.

The franchise controls:

• hiring, training and paying employees 
• running the business to the standard required by the franchisor 
• building revenue and sales 
• building the business by delivering a great customer experience.

Tough questions to ask yourself before you commit to a franchise

• Are you committed to working as hard as it takes to get your business off the ground?
• Do you have family or other commitments that will limit the number of hours you can work?
• Will you be working in an area you feel passionate about – is this something you’ll be happy to do every day for the next five years?
• Can you cope with the physical demands of the job?
• Do you have the support of family and friends?
• Is the brand aligned with your personal values and beliefs?
• Will you be able to make the most of your strengths and get support to iron out your weaknesses? 

RED FLAG MOMENT

A franchise system is built on consistency. If you’re not comfortable sticking to the rules, it’s probably not right for you.