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Should I buy into this franchise? Is this a good franchise? Can you tell me about this franchise? We recommend that you obtain the British Franchise Association's (BFA) excellent franchise information pack and consider visiting one of the franchise exhibitions which they attend and where there will be free seminars and the opportunity to explore franchising further. Further information can be found on the BFA website. Take your time - this is a big step to take requiring commitment, dedication, enthusiasm and a great deal of hard work. Do I need legal advice? Yes. We strongly recommend that you have your legal agreement vetted by a lawyer specialising in franchising. A list of BFA affiliate lawyers is given within our guide to starting a franchise. We have negotiated a deal with a specialist franchise lawyer to vet a franchise contract for a reduced fixed fee of £325, including VAT. Full details are contained within our guide. You are unlikely to get a franchisor to alter the contract, as franchisees should be operating on the same terms as each other. However, you do need to be fully aware of what your obligations are and of the penalties which you may incur if you do not meet these obligations. How much can I borrow? For an established franchise with a good track record you should be able to borrow up to 70% of the start up costs, including working capital. For a newer franchise it is likely that you will have to put in at least 40% to 50% from your own funds. It is very important that you do not over-borrow. However, it is equally important that you are not under-funded. Your personal and domestic outgoings will obviously determine the level of drawings you can take from the business. We recommend that you complete a personal budget schedule to help you establish exactly how much you ought to allow for your needs. A personal survival budget schedule can be found at the back of HSBC Bank's Starting a Business guide, which is included in our franchise information pack. Do I need a business plan/cash flow forecast? Yes, a business plan is vital to help you establish where you are, where you are going and how you intend to get there. It is a statement of your objectives, estimates and financial forecasts, and should contain cash flow forecasts, which your franchisor will often assist you with. The bank will need to see your business plan to help assess any request for finance. Our Starting a Business guide will help you through the process. We also have an easy to use PC based business plan. For more details please see our information guide. What rate of interest do you charge? Interest rates vary depending on the amount borrowed, how much stake you have and what security is available. However, we see franchising as a less risky way of starting a business, so it is likely that interest rates for a franchisee of an established franchise would be lower than those a stand-alone business would be offered. Some of the more established franchises have a finance scheme with HSBC. Do I need security? / What security will the bank require? Security will normally be required. It will depend on the amount borrowed and how much stake is to be put in. This is often going to be a charge over the family home, although there may be business assets which can be taken as security. If there is not sufficient security, we may be able to use the Government's Small Firm's Loan Guarantee scheme, although this is only available for certain businesses. At HSBC Bank, we recognise the importance of providing a flexible, professional and personal service. While many banks have moved their business managers to remote centres we have returned experienced relationship managers to our branches and given them the authority to make fast, effective decisions based on your business needs. Does it matter if my franchisor is not a member of the BFA? HSBC Bank is an affiliate member of the British Franchise Association, which was formed in 1977 to establish a code of ethics for franchisors and to ensure that it is adhered to. Membership of the BFA does not guarantee the success of your franchisor but does indicate that the franchise has been accredited by the Association and meets its ethical guidelines. Again, we suggest that you obtain the BFA's comprehensive franchisee pack. Where can I go for more information?
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