The franchisor may have produced
some financial projections for your
particular business. If not, your
accountant will help you put together
profit projections and, if necessary, a
business plan in support of your loan
application with your bank.
FRANCHISE AGREEMENT
At this stage you’ll probably be asked
to sign a franchise agreement. You
should be guided by your solicitor
as to the timing of signing the
franchise agreement, which should
be conditional on you securing
satisfactory premises and a bank loan.
SUITABLE LOCATION
Where retail premises are involved,
serious effort should be made at
this stage to secure satisfactory
premises and you should start talking
to your franchisor about the details
of converting the premises into a
franchised outlet.
FINALISING THE LEASE
By this time your bank should have
responded to your application for a
loan. If the answer is ‘yes’, you’ll be in
a position to push those involved into
finalising the lease for the premises.
It’s important that you do not
enter into a binding commitment
to take on premises until you have
your bank’s agreement to the loan
and you’ve signed the franchise
agreement. CONVERSION AND TRAINING
Once you have completed the
acquisition of the premises, you can
commence converting the premises
into a franchised outlet and going on
the franchisor’s training course.
After stage five, the sequence of
events leading up to when you’re
ready to open for business will vary,
depending on the nature of the
franchise and the level of support
forthcoming from your prospective
franchisor.
The important thing to remember
is that there will come a time when
you have to make three significant
commitments to three different
parties:
To the franchisor by signing
a franchise agreement or an
agreement to purchase a franchise.
To your landlord by signing a
lease or an agreement to take a lease
of the premises or in the case of a
mobile franchise, signing a lease, hirepurchase or purchase agreement for a
vehicle.
To the bank to take up the loan.
Having selected a franchise you
wish to buy, there are a number of
matters to which you have to attend
before you can open for business.
What you need to do will depend
on the nature of the business you’re
contemplating.
The above is a general guide to the
steps and the order in which they
might be taken and should help you
to complete the transaction more
efficiently, both in terms of costs and
in your time and effort.
Wherever possible, you should
aim to synchronise these different
transactions so that you undertake the
three commitments simultaneously.Manzoor Ishani has specialised in franchising for
more than 40 years, is a former member of the legal
committee of the British Franchise Association
and is co-author of Franchising in the UK and
Franchising in Europe.ABOUT THE AUTHOR