The benefits and pitfalls of investing in a Thai franchise

Thai franchise

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It’s not hard to see why people are attracted to franchising as a way of setting up a business in Thailand. With an established Thai franchise you are investing in a tried and tested business model – and an established brand name. You’ll have the comfort of knowing that the franchisor has piloted the business and unless you’re the first franchisee, there will be other franchisees operating, proving the business idea works and giving you a track record to judge.

A major benefit of a franchised business is that the franchisor provides initial training and ongoing support to the network of franchisees. But, before you take the plunge, it is worth noting that not every Thai franchise offers the same level of support so you’ll need to find out what is on offer before signing on the dotted line.

A word of caution: one franchisees success, does not guarantee the success of all the others – and how your franchise copes will depend on a number of factors, not least your own hard work! I can’t overstate the importance of thoroughly researching your chosen franchise and territory before making a commitment. Of course, trading performance is also directly linked to the drive, commitment and enthusiasm of the individual franchisee.

Whilst franchising is generally regarded as a safer route into self employment, don’t underestimate the heavy toll that starting a business in Thailand can take on your life. There are inevitably going to be lifestyle changes when you become your own boss, which could include working longer hours, added pressure, stress and financial uncertainty, particularly in the early years. Running your own business – whether it’s a franchise or not – requires self motivation and as rewarding as it can be, it will always be a challenge.

Prospective franchisees should take appropriate professional advice before making a commitment to invest and must not let themselves be pressurised into signing an agreement before they are ready. Most franchisors will provide sufficient information to help you make your decision, however there are questions you should ask to help you evaluate whether the franchise is right for you. Lloyds Bank’s free guide ’30 key questions about franchising’ is available to download from the website.

One very effective way of getting a sense of whether a particular Thai franchise is right for you is to speak to existing franchisees. The franchisor should be willing to give you a list once they know you are genuinely interested – and you should try and speak to as many as possible. It is likely that they will want to manage the process, but you should make sure that you don’t end up speaking to a cherry picked group of franchisees – you should be the one to choose which franchisees to speak to.

One of the most important considerations is whether you feel you can work with your prospective franchisor. They will make their own assessment to ensure they find people with the right skills and attributes to fit into their franchisee and they will ask searching questions about your own goals and motives for investing in the business. But equally, you need to ask your self whether you are suited. Franchising is a partnership and you need to be certain that you can work with the franchisor over time to build a successful business.

Of course, franchising is not right for everyone. If you value independence, or want to run a business without restrictions or to reinvent the wheel, franchising might not be the right choice. Franchising is not an easy business option and you need to go in with your eyes wide open. Having said that if you’ve done your research, considered all the alternatives and have taken the right professional guidance there’s every chance your franchise will enjoy a successful future.

Richard Holden
Head of Franchising
Lloyds Banking Group
Tel: 07802 324018

Richard heads up the Lloyds Bank franchise team and is a regular contributor to trade publications and national press. He regularly speaks at franchise seminars and exhibitions.