business: franchising


flexible financing options; you should consult these teams as opposed to your usual banking manager, as they know the sector and understand the issues impacting on it.


Seeking professional advice from accountants, solicitors, franchisee recruitment consultants and even the media – magazines, websites and social media – is important before you make any commitments. It ensures you’re on the right track and getting all the information you need before anything is signed.


The British Franchise Association holds a lot of important resources for franchisors and franchisees. Image: © istock.com/AlbertoBogo


already perfected their daily operations during the initial stages of launching their business, which means there’s less pressure and uncertainty involved.


“Owning a franchise is exactly the same as having your own business, with the added benefit of adopting a ready-made, successful commerce model,” explains Nilam.


“Business support is continually available throughout the set up stages, as well as ongoing. One of the benefits, of course, is the brand. By working with an established and respected industry name, the franchise can immediately draw on the benefits of this; benefits which include nationwide awareness and pro- active marketing activity,” she continues.


So what does it involve? Franchisees typically pay an initial fee to the franchise owner, along with continuing payments in return for their ongoing support and training. This allows you to build the business under the brand name that has already been established by the franchisor.


Once you’ve decided that this is the route you wish to take, then you will need to decide which franchise system to choose from, which can be a little overwhelming.


Ellie Tidy, UK Franchise Development Manager for Guinot, says: “The British Franchise Association (BFA) is a great place to start when looking for available opportunities, as all franchisors who are members of the BFA will have been assessed, and are then able to operate against the BFA’s Code of Ethical Franchising. The BFA also run various


educational workshops for franchisees and franchisors. There are also industry exhibitions for franchising where people can go to see what opportunities are available, along with various web portals and industry magazines.”


When you seek out an opportunity, remember that research is key. Ensure you look deep into any business to ensure they have the potential for growth, and then once you’ve narrowed down your options, you will need to analyse them thoroughly to ensure it’s a franchise worth buying.


Familiarise yourself with the brand ethics, and visualise where the company will be in five years’ time with the benefit of your investment.


You will need to review your finances and assess how much you can afford to invest, as well as how much, if any, you will need to borrow. A good starting point is to evaluate your net worth, and ensure the business can financially support your lifestyle before any decisions are made.


“Typically, franchisees look to secure up to 70% of the start-up costs through the banks,” says Ellie. “The rest of the investment is self-funded, and it’s important that additional money is held in reserve as working capital and cash flow while the business is in its infancy and getting properly established.”


A number of banks across the country – including Lloyds Bank, NatWest and HSBC – will have a specialist franchising department who can provide advice along with banking services and


A franchisee agreement is a legally binding contract, so before you sign on the dotted line, talk to a specialist franchise solicitor who will review the agreement and explain anything you may be unsure of. It will often be in excess of 30 pages, so finding a solicitor that understands it is vital. The right person will be able to clarify your rights, duties and anything that may be missing in the contract, leaving you feeling confident that you’re making the right choice.


“As with anything, you can always find some positive and some less positive things, and you have to weigh up what’s right for you,” explains Ellie.


“With running any business, franchise or not, you have to commit a lot of time to making it a success and this may not initially (or ever) give you the work-life balance that many people think will come with being a franchise,” Ellie continues. “A definite benefit of franchising is the support you receive from the franchisor and the wider network, however this does come with a degree of restrictiveness; a good franchise opportunity has a structured business format and procedures that franchisees must follow. An ongoing monthly fee is paid for this support which should be a percentage of the sales. Failure to adhere to the business format could ultimately affect your profitability, and at worst, could jeopardise your business and the money invested in it.


“Franchising has to be right for you, and you have to be right for it! Spend lots of time researching and digesting what is available, understanding the opportunities and choosing the one that best suits you and your skills, your passions and your family commitments. Once you have found your chosen franchise, you will hopefully have a long and successful relationship.”


108 GUILD NEWS


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