Since around 2008 or so we have seen an increase of so-called "franchise opportunities" in the domestic appliance service sector and we have repeatedly advised against anyone taking these deals on.
In the past we've been a bit cloak and dagger about giving the advice out because we didn't want to be seen to be upsetting anyone in the industry. We've decided to trash that approach and open the topic up in public.
Service Doesn't Pay
The fact is that provision of in-home servicing is not a get-rich-quick scheme by any means. You can make a decent living from it and earn a reasonable wage but, getting rich is extremely unlikely for all but the very few, just as it is in most industries.
You have to be very lucky and very good at your job as well as knowing how to run a business. Very few field service engineers will meet all these criteria.
The first hurdle that almost every employed engineer makes when contemplating going it alone is not to properly work out their costs. We would urge that you cast the rose tinted spectacles to one side and think long and hard about this before you even think about taking on a franchise or going self employed.
You can get loads of help and advice in the trade forums of course but it will ultimately be down to you to decide if the self-employed life will suit you.
There are of course many advantages but there are disadvantages in equal or greater measure.
If you reckon that you will make a mere few pounds from each call that you make you will be on the right track. Meanwhile, keep in mind you'll be working very hard to even get to that.
Every single franchise that is offered for sale is just that, a sale.
The company or people offering it are selling you the "franchise" and you need to understand that you are being sold to. You are buying into the concept or idea, often with some sort of investment on your part that is often non-refundable.
This should make you pause for thought and work out if you can make money from the franchise.
You also need to consider any ongoing costs that the franchise brings with it such as transportation, IT systems, insurances that are required and any of a number of other costs that you may be forced under the agreement to accept. Some of these may well form a part of the agreement and you may lose your franchise as well as your investment if you do not meet and keep up with the criteria required.
It is easy to fall foul of terms, especially when times get tough.
But, more than this just consider the following before you sign up, if this is such a wonderful opportunity and the rewards are so good, why doesn't the company employ an engineer themselves and save a fortune or, make money from it?
It is a very simple and basic question to ask. Why is this being offered as a franchise?
Of course there can be a number of reasons but, in the appliance industry, the reason would ordinarily be that the company does not want the cost of employees and the responsibilities that go along with that but does want the level of control that they would have or, close to it, over an employee.
Do you really want to be little more than a glorified employee? Without the benefits of that such as pension, holidays, sickness cover and so on. Also with the downsides like having to file accounts, maintain your own records, van, stock and everything else.
The upside for many is that they feel that they have more control over their life, but is that really the case if you only work for one brand and do you really have control over the work you receive?
No franchise opportunity that we have looked at for the appliance industry comes with any form of guaranteed workload.
Often you will find companies that offer franchises won't even guarantee exclusivity in a geography either. So you can face not only normal competition from everyone else in the industry but even competition from the company you have the franchise from!
Also in all that we've looked at there is no guarantee that any stock will be taken back and credited and, even where there is, the practicality of this is often makes it a complete nightmare to get your money back.
You now have no guarantee of work that will be provided or financial recompense if the work falls short of expectation nor do you have any guarantee that you won't be supplanted if that suits the company.
Add into the mix the usual three month termination clause which is all too popular in this industry and you have pretty much no guarantee of anything at all.
Then if it all does fall apart, you don't even have a guarantee that you will get your investment in stock back either.
The short of it is, this is not weighted in the franchisees favour. Ever.
It is a massive risk to take and one we have not ever advised anyone take. Even in the forums, these deals get panned almost universally with many people that have taken them on wishing that they hadn't done so as it has cost them dearly.
Our Advice: Get Advice!
Get access to the trade forums and ask the guys with experience of these things and running a service business, they will advise you openly and honestly without the sales pitch.
Look at the British Franchise Association (http://www.thebfa.org) is the company a member, are their franchises listed? If not, ring the alarm bell.
Look at the costs you have to take on.
Look carefully at the level of investment.
Look at the guarantees you are given.
Get legal advice.
Research, research and then research some more. Make sure you are as informed as possible and that your eyes are wide open before you sign over cash or your life to being a glorified employee, without the rights an employee may otherwise have.