Choosing the right franchisor is one of the most critical decisions a prospective franchisee will make. It’s a partnership that can shape the trajectory of your business and, ultimately, your financial success.
The United Kingdom franchising sector remains one of the most dynamic and adaptable parts of the economy, as highlighted in the 2024 National Franchise Survey by the British Franchise Association (BFA). With a contribution of £19.1 billion (€22.9 billion) annually and over 1,000 franchise systems, the opportunities are vast—but require careful evaluation.
To provide a comprehensive guide, we’ve consulted John H. Pratt, a leading franchise law expert and current partner at Hamilton Pratt, alongside insights from Pip Wilkins, Chief Executive of the BFA. Their expertise offers prospective franchisees actionable advice for making informed decisions.
Create a detailed checklist
Prospective franchisees should evaluate potential franchisors with a structured checklist. According to John Pratt, here are the five essential questions to ask:
- How many franchisees have been recruited in the last five years?
- How many franchisees have left the system in the last five years, and why?
- What is the average profitability of franchisees?
- Will banks provide financing for this franchise system?
- Can you provide a full list of all franchisees to contact, not just selected ones?
“This is a business decision, not an emotional one,” says John H. Pratt. “If a franchisor is putting pressure on you to sign the agreement quickly, that’s a red flag. Walk away and take the time to evaluate thoroughly.”
These questions form the foundation of a thorough due diligence process, ensuring you gather critical insights before making a commitment.
Understand the franchisor’s track record
The 2024 National Franchise Survey highlighted the resilience of the franchising sector, with 89% of franchise units reporting profitability. However, not all franchisors operate at this level of success. “Franchising outperforms general business because of the strong support systems in place,” explains Pip Wilkins. “But prospective franchisees must ensure their chosen franchisor is one that truly invests in its network.”
Research the franchisor’s history, reputation, and financial stability. Look for evidence of how they’ve navigated challenges, such as adapting to market shifts or supporting franchisees during economic downturns. These insights can help you distinguish a strong franchisor from a weaker one.
Evaluate training and support systems
Strong training and support systems are hallmarks of successful franchisors. Pip Wilkins highlights the importance of robust communication channels and adaptability in today’s franchising landscape.
“Post-pandemic, the shift to digital platforms has allowed franchisors to stay more connected with their franchisees than ever before,” she notes. “85% of franchisees in our survey reported regular communication with their franchisors, including 28% who interact daily.”
Ask whether the franchisor provides comprehensive initial training, ongoing professional development, and opportunities for peer-to-peer networking. A franchisor who prioritises training and communication will be better equipped to support your success. Additionally, evaluate the format of the support—does it include face-to-face meetings, online resources, or regular workshops? These details matter when assessing their commitment.
Identify red flags
Pratt warns franchisees to be cautious and avoid making hasty decisions. “Do not assume everything you’re told is true. Check the franchisor from as many sources as possible,” he advises.
Common red flags include:
- Lack of transparency about franchisee performance or profitability.
- Pressuring prospective franchisees to sign quickly.
- High franchisee turnover rates without clear explanations.
“Franchising is not a get-rich-quick scheme,” John H. Pratt emphasises. “A reputable franchisor should respect the time you need to make an informed decision.” Verify the franchisor’s claims independently, particularly around profitability and market potential.
Match the franchise to your skills and goals
Franchising spans diverse sectors, from retail and hospitality to personal services and education. Deciding which sector aligns with your skills and aspirations is key.
“Franchisees should have a clear idea of what their strengths and weaknesses are,” John H. Pratt advises. “They need to establish whether operating a retail outlet, driving a van, or managing teams works for them and choose a franchise that reflects what they want to do.”
Additionally, consider whether you’re willing to invest in a well-established brand or a newer franchisor with higher risks but potentially greater growth opportunities. Aligning your strengths with the franchisor’s model can increase your chances of success.
Speak with current franchisees
Hearing from current franchisees is one of the most reliable ways to gauge the franchisor’s support and performance.
“You must obtain a full list of all the franchisor’s franchisees,” John H. Pratt insists. “Speak to them and ask as many searching questions as possible, including about profitability and the level of support they receive.”
These conversations offer invaluable real-world insights into the day-to-day operations of the franchise network, helping you assess whether it’s the right fit for you.
Examine cultural fit and vision
Pip Wilkins stresses the importance of aligning with the franchisor’s vision and culture. “Franchising is about collaboration. A successful partnership requires shared goals and mutual respect,” she explains.
Consider how the franchisor engages with franchisees and whether their values align with yours. Do they foster a sense of community and collaboration? A good franchisor-franchisee relationship is built on trust and open communication, which are essential for long-term success.
Building a strong partnership
Choosing the right franchisor requires diligence, patience, and clarity about your own goals. As Pratt summarises, “Franchising is a partnership, not just a business transaction. Take the time to understand the franchisor’s system, culture, and support before making a decision.”
By following these steps and consulting resources like the BFA, prospective franchisees can navigate the complexities of franchising with confidence. With the right franchisor, your franchise journey can be both rewarding and prosperous.
