One of the simplest ways of starting a business is to buy a franchise. These are usually sold by suppliers of well-known products or services in order to expand their user base without investing in more staff, bricks and mortar etc. It’s also a good way of increasing cash flow.

Franchises can represent a good deal for a startup business. Typically, the franchising business will provide product, literature, national advertising, links to potential customers, and much else. All for a price, of course.

What to look out for when buying a franchise

1. Make sure you have a solid business plan in which you have budgeted for your living expenses and management fees.

2. You may have to borrow from a bank, but expect to commit about one-third of the total cost yourself.

3. The franchisor should know the business and its prospects better than you, so take their projections seriously.

4. See if you are eligible to secure any loan through the UK Government’s Small Firms Loan Guarantee Scheme, if you are in the UK. Other countries may have similar schemes.

5. If you are not satisfied with the information you are given by the seller, walk on by.

Tomorrow we’ll look at what you need to do before you sign on the dotted line.