I normally turn to regulated countries to see how they have progressed in their franchise markets in order to take the industry and all the people that go with it to greater heights.
There is an organisation in the States called: The Small Business Administration (see: http://www.sba.gov/aboutsba/index.html) who help small businesses start, build and grow. On their site they say “We recognize that small business is critical to our economic recovery and strength, to building America’s future, and to helping the United States compete in today’s global marketplace.”
How do they do this? They have a framework in place that helps to expedite small business loans (amongst other things). A good example is that Franchisors can have their business accredited/approved by the SBA, so that any incoming franchisees seeking finance have a fantastic chance of getting their finance approved quicker. Obviously the usual finance credibility criteria would stand – however, by some of the hoops already being jumped by the Franchisor right upfront – he has a better chance of growing his network of franchisees with this endorsement.
We still don’t have something like this in place in the UK. Some banks will say that they ‘approve’ certain franchisors (but only off the basis of that model already being run elsewhere and with multiple sites). However there is no real framework in place that (a) Banks can trust and therefore approve the Franchisor’s Business Plan and Model and (b) incoming franchisees can trust to give them an indication of the Franchisor’s value long term.
What have your experiences been as a prospective franchisee looking for finance to invest in a franchise?
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