The next steps

You have made one of the most important decisions in your life, which is whether or not to start a business of your own. The next decision is just as important - what sort of franchise business to go into. And once you have selected a franchise, there are a number of matters to which you have to attend before you can begin trading. Of course what to do next depends upon the nature of the venture. Nevertheless, the following steps should help you start out more efficiently, both in terms of costs and also in terms of your time and effort.

1. Decide whether you want to be involved in a service or retail business.
There are of course pros and cons to either. If you are the sort of person who does not want to work anti-social hours, then a retail operation or a business that operates during office hours would suit you better. However a retail operation from a fixed location does have disadvantages, such as taking on lease obligations, employing staff and carrying stock. On the other hand, if you are in the service business, it is quite likely that working office hours alone will not cut the mustard. Much depends, of course, on the type of service business, but if you take a carpet-cleaning business as an example, this will invariably mean working anti-social hours. On the other hand, you are quite likely to be working from home with little or no need to carry a large stock of products, nor to employ many people.

2. Decide how much you can afford.
There is now usually a choice of franchises in the same line of business and they don't all cost the same. For example, there is more than one carpet-cleaning franchise available. Moreover, there are many service franchises also available, so the logical thing to do is to see what is available for sale in your price range.

3. Obtain as much detail from the franchisor as possible.
Where the franchisor provides financial illustrations, study these carefully to satisfy yourself that the income shown in those illustrations meets your needs and requirements. However, you should always bear in mind that these are only illustrations and may be optimistic.

4. While reviewing the information supplied by the franchisor, contact your bank manager (if you think you will need a loan) and discuss whether, in principle, the bank will lend you the money you require for the type of franchise you are contemplating buying. Most banks now have specialised franchise departments or operate sophisticated information systems so that bank managers have access to detailed information about franchises, enabling them to make an informed lending decision.

5. Arrange for a solicitor who is experienced in franchising to review the franchise agreement and advise you on it.

6. If you and your solicitor are satisfied with the agreement, see your accountant for advice on the more detailed financial aspects of the franchise. By this time you should have some idea of the sort of premises you will be occupying or your territory, i.e. your area of operations in the case of a mobile franchise. The franchisor may have produced some financial projections for your particular business. If not, your accountant will help you to put together profit projections and a business plan in support of your loan application.

7. At this stage you will probably be asked to sign the franchise agreement. You should be guided by your solicitor as to the timing of signing the franchise agreement, which should be conditional on your securing satisfactory premises and a bank loan if needed.

8. Where retail premises are involved, at this stage a serious effort should be made to secure satisfactory premises. You should also start talking to your franchisor about the finer details of converting the business premises into a franchised outlet.

9. By this time your bank should have responded to your application for a loan and if the answer is 'yes' you will be in a position to push those involved into finalising the lease for the premises. It is important that you do not enter into a binding commitment to take on premises unless and until you have your bank's agreement to the loan and you have signed the franchise agreement.

10. Once you have completed the acquisition of the premises you can go about converting the premises into a franchised outlet and go on the franchisor's training course.

From stage five you will find that the sequence of events before you are ready to open for business will vary depending upon the nature of the franchise.

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 case of a mobile franchise, signing a lease, hire purchase or purchase agreement for a vehicle); and

• To the bank to take up the loan.

Wherever possible you should aim to synchronise these so that you undertake commitments simultaneously. Once you've done that, you're on your way.