Franchise Advice


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re you fed up of the daily grind of Monday to Friday, nine to five? Or perhaps its eight to six, or seven days a week on shift patterns. Either


way, you are probably working hard for a wage, while helping to make somebody else wealthy. Perhaps now is the time for you to break the pattern, and think about being your own boss.


When considering such a life-changing decision, there are many factors to consider. The first is which sector you want to operate in. Some people will want to stick to what they know, and choose a business in the industry sector they have previously worked in. Many, however, will choose a new sector in which they have no previous experience. This is possible in franchising, unlike self-employment, because the franchisor will have a proven system and track record, and should offer full and detailed training, help and support, giving you the skills that you will need to succeed in a new venture. You will also need to decide upon the investment level that you can afford, or are willing to commit to a new business venture. There are franchises at all levels of investment, ranging from under £10,000, up to over a £1million investment. Often a franchise fee will include a turnkey


38 | BusinessFranchise.com | May 2017


package of equipment and stock, however sometimes there are additional expenses on top of the franchise fee. A prospective franchisee should investigate this carefully, and also consider how long it will take to reach profitability, and therefore how much additional working capital they will need. While only around half of new franchisees need to borrow money, the franchise-friendly banks will lend, for the right franchisor and subject to status, between 50 per cent and 70 per cent of the required funds.


A key element to consider here is the time it will take to recoup this initial investment. As a rule of thumb, for an investment of £10,000 to £20,000, you should expect a return on investment in 12 to 18 months. For larger investments, this timeframe could be longer. You should consider the term of the franchise agreement and the renewal clause to make sure that you have enough time to both recover your investment and build a profitable business.


Then comes the difficult decision of which franchisor to choose within your chosen sector and budget. Some sectors can have many franchisors operating in competitive markets. Often, however, a franchisor may operate in a very niche market with little competition, and may


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